The Impact of Double Taxation Treaties on Foreign Direct Investment: Evidence from Large Dyadic Panel Data

12 Pages Posted: 21 Jun 2010

See all articles by Fabian Barthel

Fabian Barthel

London School of Economics & Political Science (LSE)

Matthias Busse

Ruhr-University Bochum; HWWI - Hamburg Institute of International Economics

Eric Neumayer

London School of Economics and Political Science (LSE)

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Abstract

To increase inward foreign direct investment (FDI), policy makers increasingly resort to the ratification of double taxation treaties (DTTs). However, the effectiveness of DTTs in inducing higher FDI is still open to debate, as the empirical evidence of existing studies is anything but conclusive. In contrast to earlier approaches, we use a largely unpublished dataset on bilateral FDI stocks, covering a much larger and more representative sample of host and source countries. Controlling for standard determinants of FDI and employing various econometric specifications, our results indicate that DTTs do lead to higher FDI stocks and that the effects are substantively important as well.

Suggested Citation

Barthel, Fabian and Busse, Matthias and Neumayer, Eric, The Impact of Double Taxation Treaties on Foreign Direct Investment: Evidence from Large Dyadic Panel Data. Contemporary Economic Policy, Vol. 28, No. 3, pp. 366-377, July 2010. Available at SSRN: https://ssrn.com/abstract=1627389 or http://dx.doi.org/10.1111/j.1465-7287.2009.00185.x

Fabian Barthel (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://personal.lse.ac.uk/barthel

Matthias Busse

Ruhr-University Bochum ( email )

Faculty of Management and Economics, GC 3/145
D-44780 Bochum, DE 44780
Germany

HWWI - Hamburg Institute of International Economics

Heimhuder Str. 71
Hamburg, 20148
Germany

Eric Neumayer

London School of Economics and Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 207 955 7598 (Phone)
+44 207 955 7412 (Fax)

HOME PAGE: http://personal.lse.ac.uk/neumayer

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