Optimal Taxation of FDI in a Small Open Economy

Sangwhan Lho
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Sangwhan Lho: Korea Environment Institute

Korean Economic Review, 1998, vol. 14, 291-308

Abstract: Most previous stuides on optimal taxation of foreign direct investment income(FDI) have focused on optimal taxation of international capital flows. However, some studies have shown that multinationals exist not because of a capital abundance in a home country. Then, if foreign direct investment occurs due to some technological advantage over a host country, optimal taxation on FDI will be changed for both the host and the home country. Therefore, the study analyzes the optimal taxation on a multinational firms investment in intangibles, I assume R&D investment is a representative intangible. Unlike physical capital, R&D investment has the characteristics of being a public good.

Keywords: Optimal Taxation; FDI; R&D Spillovers (search for similar items in EconPapers)
JEL-codes: H21 (search for similar items in EconPapers)
Date: 1998
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