Corporate Taxation, Agglomeration and FDI: Firm Level Evidence for Belgium

Tim Goesaert

Working Papers of VIVES - Research Centre for Regional Economics from KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics

Abstract: This paper analyzes the sensitivity of Belgian outbound FDI to cor- porate taxation rates and economic clustering. Our approach involves detailed balance sheet data of the foreign aliates as our proxy of FDI and a measure of regional knowledge spillovers as agglomeration variable. The results reveal that investments are sensitive to changes in fiscal policy, with an average tax sensitivity of around -1.5. We also pick up an effect of agglomeration economies: a regional increase in the number of own industry firms dampens tax sensitivity.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:ete:vivwps:23

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