Are tax rates still decisive in FDI investment Choice or what drives sectoral FDI nowadays?

Nicolae-Bogdan Ianc
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Nicolae-Bogdan Ianc: LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne, UVT - Universitatea de Vest din Timișoara [România] = West University of Timișoara [Romania] = Université Ouest de Timișoara [Roumanie]

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Abstract: We explore the effects of effective taxation and institutional quality on sectoral FDI. Our analysis comprises European countries and we use data from 2002 to 2020. We employ a GMM approach and show that a rise in both apparent taxation and tax differential reduces sectoral FDI flow while soaring tax differential increase FDI stock. Among the institutional variables, tertiary enrollment attract FDI and secondary attainment has opposite results depending on the sectoral FDI. Our findings indicate that government should lower taxation for more FDI flows and strengthen tertiary and secondary enrollment.

Keywords: Sectoral FDI effective taxation institution quality European countries. JEL classification: F21 H21 O43; Sectoral FDI; effective taxation; institution quality; European countries. JEL classification: F21; H21; O43 (search for similar items in EconPapers)
Date: 2023-07-06
Note: View the original document on HAL open archive server: https://univ-orleans.hal.science/hal-04154359
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