Citation

Discussion Paper Details

Please find the details for DP6299 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Productivity and Taxes as Drivers of FDI

Author(s): Assaf Razin and Efraim Sadka

Publication Date: May 2007

Keyword(s): corporate taxation, Foreign direct investment, productivity and selection and flow equations

Programme Area(s): International Macroeconomics

Abstract: We study the role of productivity and corporate taxation as driving forces of FDI among OECD countries in the presence of threshold barriers, which generate two margins for FDI decisions. Some simulations, based on the estimation results, suggest that there are marked differences in the sensitivity of FDI flows from the U.S. to productivity and taxes in OECD countries. Data on FDI flows are drawn from the International Direct Investment dataset (Source OECD), covering the bilateral FDI flows among 18 OECD countries over the period 1987 to 2003.The sensitivity of these flows to productivity in the U.K. is positive and high, relative to other EU countries and Japan. Similarly, the sensitivity of these flows to taxes in the U.K is negative and high, relative to other EU countries and Japan.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6299

Bibliographic Reference

Razin, A and Sadka, E. 2007. 'Productivity and Taxes as Drivers of FDI'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6299