Do Tax Havens Divert Economic Activity?
12 Pages Posted: 21 Apr 2005
Date Written: April 2005
When multinational firms expand their operations in tax havens, do they divert activity from non-havens? Much of the debate on tax competition presumes that the answer to this question is yes. This paper offers a model for examining the relationship between activity in havens and non-havens, and discusses the implications of recent evidence in light of that model. Properly interpreted, the evidence suggests that tax haven activity enhances activity in nearby non-havens.
Keywords: Tax havens, tax competition, foreign direct investment, investment, multinational firms
JEL Classification: H87, F23, F21
Suggested Citation: Suggested Citation