The Impact of Taxes and Public Spending on the Location of FDI: Evidence from Fdi-Flows within Europe

28 Pages Posted: 5 Dec 2002

See all articles by Thiess Buettner

Thiess Buettner

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 15, 2002

Abstract

In a place to place analysis of bilateral FDI flows the average company tax burden, the statutory corporation tax rate, as well as the cost of capital are used to capture the tax incentives. In addition, indicators of public spending in general and with regard to different functions of government and rankings of competitiveness related to public sector activities are used to measure the role of public service provision. The results show significant effects of tax incentives, in particular, the marginal tax burden and the statutory tax rate prove jointly significant. However, only weak indications of a countervailing effect of public expenditures are found.

Suggested Citation

Buettner, Thiess, The Impact of Taxes and Public Spending on the Location of FDI: Evidence from Fdi-Flows within Europe (March 15, 2002). ZEW Discussion Paper No. 02-17, Available at SSRN: https://ssrn.com/abstract=335724 or http://dx.doi.org/10.2139/ssrn.335724

Thiess Buettner (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Lange Gasse 20
Nürnberg, Bavaria 90403
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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