Foreign Direct Investment, Tax Competition and Social Expenditure

Holger Görg (), Hassan Molana and Catia Montagna

No 198, Discussion Papers from University of Dundee, Economic Studies

Abstract: The aim of this paper is to make a first step towards studying the role of social expenditure and its interaction with corporate taxation in determining the destination of foreign direct investment (FDI) flows. Using panel data for 18 OECD countries and measuring the extent of social welfare policies by the (public social expenditure)/GDP ratio, we find strong support for the conjecture that redistributive social welfare state policies are valued by multinationals as, for instance, they may signal a government’s commitment to social stability.

Keywords: Foreign Direct Investment; Tax Competition; Social Policy (search for similar items in EconPapers)
JEL-codes: F21 F23 H5 H25 H87 (search for similar items in EconPapers)
Date: 2007-01
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Related works:
Working Paper: Foreign Direct Investment, Tax Competition and Social Expenditure
Journal Article: Foreign direct investment, tax competition and social expenditure (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:dun:dpaper:198

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