An empiric approach of the FDI-taxation relationship in Romania

Ioan Talpoș and Bianca Maria LUDOŞEAN (stoiciu)
Additional contact information
Ioan Talpoș: West University of Timisoara
Bianca Maria LUDOŞEAN (stoiciu): West University of Timisoara

Theoretical and Applied Economics, 2012, vol. XVIII(2012), issue 10(575), 15-30

Abstract: In the heart of the debate on the appropriate level of the profit tax burden on host countries lies a challenging question: How does FDI respond to tax rates? Studies analyzing inter-state fluctuation show that, on average, FDI decreases by 3.7% when corporate tax rates increase by one percentage point, other studies show that the FDI decline varies between 0 and 5%. Such variations reflect differences between nations and industries studied, as well as differences between time periods which have been considered. More recent studies show that FDI becomes increasingly sensitive to tax reflecting a growing mobility of capital as non-tax barriers, previously in the way of FDI, are eliminated (OCDE, 2008). The present article aims to study the effects of tax upon foreign direct investment in Romania. The period studied prolongs on ten years, from 1999 to 2009, with the aim to observe the effects of modifications upon tax revenues, direct tax and indirect tax on foreign investment in Romania. To study the relationship between the variables, econometric modelling has been used thanks to the software package Eviews 5.0. This paper’s main conclusion is that foreign direct investment are not discouraged by the level of tax in Romania, on the contrary, they are stimulated by an eventual increase in tax revenue.

Keywords: foreign direct investment; tax; simple regression; correlation. (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://store.ectap.ro/articole/782.pdf (application/pdf)
http://www.ectap.ro/articol.php?id=782&rid=91 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:10(575):y:2012:i:10(575):p:15-30

Access Statistics for this article

Theoretical and Applied Economics is currently edited by Mircea Dinu

More articles in Theoretical and Applied Economics from Asociatia Generala a Economistilor din Romania / Editura Economica Contact information at EDIRC.
Bibliographic data for series maintained by Mircea Dinu ().