The Relationship Between Double Taxation Treaties and Foreign Direct Investment

TAX TREATIES: VIEWS FROM THE BRIDGE - BUILDING BRIDGES BETWEEN LAW AND ECONOMICS, pp. 3-18, M. Lang, P. Pistone, J. Schuch, C. Staringer, eds., Amsterdam: IBFD, 2010

16 Pages Posted: 7 Feb 2011

See all articles by Fabian Barthel

Fabian Barthel

London School of Economics & Political Science (LSE)

Matthias Busse

Ruhr-University Bochum

Richard Krever

University of Western Australia Law School

Eric Neumayer

London School of Economics and Political Science (LSE)

Date Written: June 30, 2010

Abstract

This paper explores the question whether entering into double tax treaties leads to more foreign investment. The topic has been the subject of a number of studies that have generated inconsistent results. The paper reviews previous studies and notes the limitations that may have affected their results. It reports on a comprehensive regression analysis survey that drew upon a far larger data set and considered more independent variables than previous studies. The study found that the strong correlation between entering into double tax treaties and attracting more foreign direct investment is stronger than the relationship with most other independent variables. It considers, however, whether there may be other exogenous factors that can explain both the increase in treaties and in foreign direct investment.

Suggested Citation

Barthel, Fabian and Busse, Matthias and Krever, Richard and Neumayer, Eric, The Relationship Between Double Taxation Treaties and Foreign Direct Investment (June 30, 2010). TAX TREATIES: VIEWS FROM THE BRIDGE - BUILDING BRIDGES BETWEEN LAW AND ECONOMICS, pp. 3-18, M. Lang, P. Pistone, J. Schuch, C. Staringer, eds., Amsterdam: IBFD, 2010. Available at SSRN: https://ssrn.com/abstract=1756550

Fabian Barthel

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

Richard Krever (Contact Author)

University of Western Australia Law School ( email )

M253
35 Stirling Highway
Crawley, Western Australia 6009
Australia

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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