Tax competition and FDI: The special case of developing countries
Celine Azemar () and
Journal of the Japanese and International Economies, 2008, vol. 22, issue 1, 85-108
According to the foreign direct investment (FDI) literature, the elasticities between FDI and its determinants vary considerably with the level of host country development. This may be a major concern when dealing with the influence of corporate tax rates on FDI in developing countries, since most studies concentrate on developed countries. Using data on Japanese firm location choices between 1990 and 2000, we contrast differences in regional tax rates in order to reveal an asymmetry between developed and developing countries. By looking at the interaction effects between Japan and host developing countries' tax systems, we also put forward the idea that special tax sparing provisions signed with Japan can alter the effect of host country taxes on Japanese firms' location choices. Finally, we find that even though tax competition can be strong in developing countries, this competition should not lead to an effective rate of zero taxation for these countries in their competition for FDI inflows. J. Japanese Int. Economies 22 (1) (2008) 85-108.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:22:y:2008:i:1:p:85-108
Access Statistics for this article
Journal of the Japanese and International Economies is currently edited by Takeo Hoshi
More articles in Journal of the Japanese and International Economies from Elsevier
Bibliographic data for series maintained by Catherine Liu ().