The heterogenous impact of taxation on FDI: A note on Djankov et al. (2010)

Alejandro Esteller-Moré, Leonzio Rizzo and Riccardo Secomandi

Economics Letters, 2020, vol. 186, issue C

Abstract: Taxes in the host country matter a lot for FDI inflows, but only for non-OECD countries. Taking advantage of the rich dataset constructed by Djankov et al. (2010), we show, for example, that raising the first-year effective corporate income tax rate by 10 pp reduces FDI inflows by 3.4 to 1.9 pp in non-OECD countries; and the effect is null for OECD countries. Not taking this heterogeneity into account upward (downward) biases the estimated impact of the corporate tax on FDI inflows for OECD (non-OECD) countries.

Keywords: Foreign direct investment; Corporate income tax rate; OECD (search for similar items in EconPapers)
JEL-codes: E22 F23 G31 H25 H32 L26 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:186:y:2020:i:c:s0165176519303891

DOI: 10.1016/j.econlet.2019.108775

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