The Impact of Double Tax Treaties on Foreign Direct Investments: Evidence from Turkey?s Outward FDIs

Savas Cevik and Mehmet Okan Ta?ar ()
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Mehmet Okan Ta?ar: Selcuk University, Faculty of Economics and Administrative Sciences, Department of Economics

No 2504045, Proceedings of International Academic Conferences from International Institute of Social and Economic Sciences

Abstract: Double tax treaties (DTT) are mainly signed to overcome the problem of international double taxation and to coordinate national tax systems in bilateral or multilateral economic interactions. However, one more reason to engage in DTTs is to facilitate international economic flows for capital especially and to attract foreign capital. To increase foreign direct investment (FDI) is a desirable policy goal for both developing and developed countries. In order to examine whether DDTs have significant impact on FDIs, this paper analyzes Turkey?s outward FDI stocks to 71 host countries over the period of 2001-2012. In analyses, we use Turkey?s FDI stock toward the host countries as dependent variable. In addition a number of control variables, we analyze the impact of a dummy of presence of DTTs and the age of treaty. As the estimation technique, we mainly use fixed effect estimators and regressions with panel-corrected standard errors (PCSE) to handle heteroskedasticity and autocorrelation, in addition to some other specifications for robustness aims. After controlling for various determinants of bilateral FDI stocks, the study?s results show that DTTs are indeed positively associated with foreign investment toward the host country from Turkey. This finding supports policy considerations on the impact of DTTs on FDIs. The results hold for various of specifications.

Keywords: double tax treaties; foreign direct investments; international double taxation (search for similar items in EconPapers)
JEL-codes: F21 H25 H87 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2015-06
New Economics Papers: this item is included in nep-acc, nep-ara, nep-cwa, nep-int and nep-pbe
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Published in Proceedings of the Proceedings of the 16th International Academic Conference, Amsterdam, Jun 2015, pages 120-139

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Persistent link: https://EconPapers.repec.org/RePEc:sek:iacpro:2504045

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