Suchergebnisse

This paper explores the effects of tax provisions aimed at restricting multinationals' tax planning on foreign direct investment (FDI). Using a unique dataset which allows us to observe the worldwide activities of a large panel of multinational firms, we test how limitations of interest tax deductibility, so-called thin-capitalization rules, and regulations of transfer pricing by the host country affect investment and employment of foreign subsidiaries. The results indicate that, compared with the unrestricted case, in the presence of a typical thin-capitalization rule, the tax-rate sensitivity of FDI is about twice as large. Moreover, introducing such a rule or making it more tight exerts significant adverse effects on the level of FDI in high-tax countries. Regulations of transfer pricing, however, are not found to exert significant effects on FDI.

This paper analyses the behaviour of competing governments in the EC with respect to inflows of direct investment. Solving a non-cooperative sequential bargaining game in which host countries gain from direct investment through tax revenue or imposition of forced local subcontracting, it is concluded that a successful 1992 program does not allow discrimination of direct investment. As they bid against each other for the attraction of projects, the EC countries will give away rents generated by protectionism. Hence, multinational firms may temper the emergence of trading 'blocs' through their ability to play individual countries against each other.

colloque international organisé par the Francophone Area Studies Research Group (T. Chafer) ; info:eu-repo/semantics/nonPublished

Foreign direct investment (FDI) is an increasingly important part of the world economy. Foreign investment is especially important in developing countries where it can make up for a lack of domestic capital, increase tax receipts, improve employment, and hopefully lead to economic development. Given the potential importance of foreign direct investment it is important to understand why some countries receive more foreign investment than others. This dissertation examines the role a country's respect for the rule of law plays in its ability to attract FDI. Using regression analysis I find investors prefer countries that protect contract, property, and physical integrity rights. At the same time, countries with a weak rule of law are still able to attract FDI. Using the results of an original survey of U.S.-based CEOs, phone interviews, statistical analysis, and a case study of China, I argue investors use personal relationships with business partners and government connections to reduce the uncertainty created by a weak rule of law. Furthermore, investors prefer personal relationships more than formal rule-of-law substitutes like bilateral investment treaties and special economic zones.