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ON THE EFFICIENCY OF FISCAL COMPETITION FOR FDI WHEN INCUMBENT FIRMS ARE FOREIGN-OWNED

Andreas Hoefele and Ben Ferrett

Centre for Firms in the Global Economy (CFGE) Discussion Papers from School of Business and Economics, Loughborough University

Abstract: We show that the international distribution of ownership of the incumbent firms within a host region matters for the efficiency of the fiscal competition between the region’s constituent countries for a new FDI project. If incumbent firms are owned entirely within the host region, then the new plant’s location will be efficient. However, when incumbent firms are owned outside the host region and the degree of such extra-regional ownership varies substantially across the competing host countries – as it does in the data – then inefficient locations might win contests for new plants.

Keywords: FDI; fiscal competition; efficiency; foreign ownership. (search for similar items in EconPapers)
JEL-codes: F23 H25 H73 (search for similar items in EconPapers)
Date: 2014-05, Revised 2014-05
New Economics Papers: this item is included in nep-int
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http://www.lboro.ac.uk/departments/sbe/RePEc/lbo/lbcfge/CFGE_DP_2014_01.pdf

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Journal Article: On the efficiency of fiscal competition for FDI when incumbent firms are foreign-owned (2015) Downloads
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