The quest for non-resource-based FDI: Do taxes matter?

Tidiane Kinda

Macroeconomics and Finance in Emerging Market Economies, 2018, vol. 11, issue 1, 1-18

Abstract: Using manufacturing and services firm-level data for 30 African countries, we show that taxation is not a significant driver for the location of foreign firms in Africa, while other investment climate factors, such as infrastructure, human capital, and institutions, are. By analysing disaggregated foreign direct investment (FDI) data, we establish that, while there is considerable contrast in behaviour between vertical FDI and horizontal FDI, taxation is not a key determinant for either type of FDI. Horizontal FDI is affected more by financing and human capital constraints, and less by infrastructure and institutional constraints, than is vertical FDI.

Date: 2018
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Working Paper: The Quest for Non-Resource-Based FDI: Do Taxes Matter? (2014)
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DOI: 10.1080/17520843.2016.1244095

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