FDI and income inequality in tax-haven countries: The relevance of tax pressure

Gonzalo Soto, Carlos Jardon and Xavier Martinez-Cobas

Economic Systems, 2024, vol. 48, issue 1

Abstract: The agenda of the United Nations sustainable development goals (SDGs) for 2030 has shifted attention from poverty to equality. Unlike poverty, which has declined, inequality has not significantly changed in the past twenty years. Hence, in the absence of a strong fiscal context in which profits are redistributed from governments to their local societies, tax havens are likely to cement inequality in place. In this paper, we study the effects of foreign direct investment (FDI) on income inequality in terms of different indicators using a panel data analysis in 46 countries with a low tax burden over the period 2000–2021. Our results confirm that FDI contributes to mitigating income inequality and improving welfare in the countries studied. This process is likely to be more effective in the presence of a supportive tax framework.

Keywords: FDI; Income inequality; Gini index; Palma ratio; Tax havens (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0939362523001115
Full text for ScienceDirect subscribers only

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:eee:ecosys:v:48:y:2024:i:1:s0939362523001115

DOI: 10.1016/j.ecosys.2023.101172

Access Statistics for this article

Economic Systems is currently edited by R. Frensch

More articles in Economic Systems from Elsevier Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Liu ().