Productivity and Taxes as Drivers of FDI

Assaf Razin and Efraim Sadka
Additional contact information
Efraim Sadka: Tel-Aviv University, CESifo and IZA

No 172007, Working Papers from Hong Kong Institute for Monetary Research

Abstract: We develop a framework in which the host-country productivity has a positive effect on the intensive margin (the size of FDI flows), but only an ambiguous effect on the extensive margin (the likelihood of FDI flows to occur). The source-country productivity has a negative effect on the extensive margin. An increase in the host-country corporate tax rate reduces the actual FDI flows and the likelihood that such flows will occur. An increase in the source-country corporate tax rate reduces the likelihood of FDI flows. These predictions are confronted with data on FDI flows, drawn from the International Direct Investment dataset (Source OECD), covering the bilateral FDI flows among 18 OECD countries over the period 1987 to 2003. We find some support for the main predictions of the model.

Pages: 34 pages
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.hkimr.org/uploads/publication/180/ub_full_0_2_159_hkimr-no17_bw.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.hkimr.org/uploads/publication/180/ub_full_0_2_159_hkimr-no17_bw.pdf [301 Moved Permanently]--> http://www.aof.org.hk/research/HKIMR/uploads/publication/180/ub_full_0_2_159_hkimr-no17_bw.pdf [301 Moved Permanently]--> https://www.aof.org.hk/research/HKIMR/uploads/publication/180/ub_full_0_2_159_hkimr-no17_bw.pdf)

Related works:
Working Paper: Productivity and Taxes as Drivers of FDI (2007)
Working Paper: Productivity and Taxes as Drivers of FDI (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hkm:wpaper:172007

Access Statistics for this paper

More papers in Working Papers from Hong Kong Institute for Monetary Research Contact information at EDIRC.
Bibliographic data for series maintained by HKIMR ().