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Regional vs. Global Financing Strategies for U.S. MNEs

Joseph Daniels, Walid Hejazi () and Marc von der Ruhr ()
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Walid Hejazi: Rotman School of Management, University of Toronto

No 511, Working Papers and Research from Marquette University, Center for Global and Economic Studies and Department of Economics

Abstract: Despite declining in 2001, foreign direct investment (FDI) surged during the 1990s. As a result, current levels of FDI flows are triple their 1990 levels. It is well documented in the literature that FDI occurs in large part among countries that are geographically close. It is also well established that the NAFTA had a significant impact on both U.S. FDI flows and hence FDI stocks. In addition, tax policies and tax treaties have been shown to be important drivers of U.S. FDI. The analysis presented in this paper confirms these earlier results. We extend the analysis, however, to show that tax treaties have a significant impact on financing patterns of U.S. MNE activities abroad. Based on these results, we argue that bilateral tax treaties should be an important part of trade agreements between the United States and Latin American partners in anticipation of a Free Trade Agreement of the Americas (FTAA).

JEL-codes: F21 F23 H20 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2005-06
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Published in the North American Economic and Financial Integration: Research in Global Strategic Management, Vol(10), 2004, A. Rugman, ed., Oxford: Elsevier Ltd., Publishing, pages 49-66

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