Multinationals, Tax Holidays, and Technology Transfer

ISER Discussion Paper No. 717

33 Pages Posted: 31 Jul 2008 Last revised: 11 Oct 2008

See all articles by Kaz Miyagiwa

Kaz Miyagiwa

Emory University - Department of Economics; Osaka University - Institute of Social and Economic Research (ISER); Florida International University (FIU) - Department of Economics

Yuka Ohno

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: July 1, 2008

Abstract

Host country governments often grant investment incentives to foreign firms locating in their territories. We show that such preferential treatment of foreign firms can facilitate transfer of foreign technology, induce entry by the local firm, and increase host country welfare. However, this pro-competitive result occurs when preferential treatment is granted for a limited time; i.e., it takes the form of tax holidays, and is absent under permanent tax concessions.

Keywords: Tax holidays, Free trade zones, Foreign direct investment, Technology transfer

JEL Classification: F1, O3

Suggested Citation

Miyagiwa, Kaz and Ohno, Yuka, Multinationals, Tax Holidays, and Technology Transfer (July 1, 2008). ISER Discussion Paper No. 717. Available at SSRN: https://ssrn.com/abstract=1181423 or http://dx.doi.org/10.2139/ssrn.1181423

Kaz Miyagiwa (Contact Author)

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki Osaka 567-0047
Japan

Florida International University (FIU) - Department of Economics ( email )

Miami, FL 33199
United States

Yuka Ohno

affiliation not provided to SSRN ( email )

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