Effective Tax Rates as a Determinant of Foreign Direct Investment in Central and East European Countries: A Panel Analysis

Christian Bellak and Markus Leibrecht

Chapter 16 in Multinationals, Clusters and Innovation, 2006, pp 272-288 from Palgrave Macmillan

Abstract: Abstract Governments in Central and East European Countries (CEEC-5; see Table 16.1) intervene to influence the location choice of multinational enterprises (MNEs) by various measures. They provide incentive packages, fiscal and non-fiscal, and they try to shape various location factors in order to lower production costs for foreign firms. One location factor that figures prominently in actual policy-making as well as in the public debate is the corporate income tax rate. What is at issue therefore is, whether tax-rate cuts are an appropriate policy tool for attracting foreign direct investment (FDI)2 and whether FDI responds significantly to changes of the corporate income tax burden in the CEEC-5.

Keywords: Foreign Direct Investment; Host Country; Foreign Direct Investment Inflow; East European Country; Foreign Direct Investment Flow (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1057/9780230624948_16

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