A Review of the Empirical Literature on FDI Determinants

Blonigen, Bruce A.

doi:10.3386/w11299

Cited by 378 publications

(411 citation statements)

References 47 publications

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“…1 Beyond the tax rate faced by the multinational firm, little attention has been paid to other characteristics of the tax system that might also affect the ease of doing business in a particular country. 1 Beyond the tax rate faced by the multinational firm, little attention has been paid to other characteristics of the tax system that might also affect the ease of doing business in a particular country.…”

Section: Introductionmentioning

confidence: 99%

Do Complicated Tax Systems Prevent Foreign Direct Investment?

Lawless

2012

Economica

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The negative relationship between tax rates and FDI is well known. This paper looks at how complexity of the tax system affects FDI. Fulfilling tax requirements can be time-consuming, and this implies a cost for more complex tax systems. Alternatively, complexity may provide opportunities to reduce the overall tax bill. We find that measures of tax complexity have a significant inhibiting effect on the presence of FDI for a country pair, but have little impact on the level of FDI flows. A 10% reduction in tax complexity is comparable to a one percentage point reduction in effective corporate tax rates.

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Section: Introductionmentioning

confidence: 99%

Do Complicated Tax Systems Prevent Foreign Direct Investment?

Lawless

2012

Economica

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“…Based on the recent empirical evidence, as this was examined thoroughly by Chakrabarti (2001) and Blonigen (2005), we focus our attention on “traditional” FDI explanatory variables such as the size of the market, agglomeration effects, labor cost, openness, macroeconomic stability and real exchange rate, as well as “non‐traditional” variables such as human capital, institutional quality and European Cohesion funds.…”

Section: Data Methodology and Empirical Resultsmentioning

confidence: 99%

The Impact of EU Structural Funds on FDI

Katsaitis

Doulos

2009

Kyklos

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The effectiveness of EU Structural Funds on the economic performance of the receiving countries has been extensively investigated in the last twenty years. The results indicate that the impact of these funds on economic growth is conditional on the quality of the institutions of the receiving countries. In the case of countries with poor institutional quality, the effect of Structural Funds on economic growth will be negative. The reason being, that Structural Funds do affect the allocation of recourses and in countries with poor institutional quality the misallocation of resources might worsen. For example, corruption might divert funds from productive activities; increased opportunities for rent seeking might absorb resources and so on. Copyright 2009 Blackwell Publishing Ltd.

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“…Instead, we use a gravity specifications to capture many of the effects alluded to above, but focus on the effect of free trade and investment agreements. As noted by Blonigen (2005), while having an atheoretical construct, the gravity model has been shown to empirically describe FDI flows well and has become widespread in the literature. Like Yang et al (2000), we employ a gravity model to account for as much variation in the data as possible while concentrating on variables of interest.…”

Section: Determinants Of Fdimentioning

confidence: 97%

“…13 In this paper, we examine the impact of trade and investment agreements on FDI flows in Australia. Some work has been conducted on this issue, but not specifically applied to the case of 12 Hymer (1976), Caves (1974), Blonigen (2005). 13 By way of example, on the subject of wages see Yang et al (2000) for a discussion of those finding for and against wage differentials as a determinant of FDI.…”

Section: Determinants Of Fdimentioning

confidence: 98%

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The Impact of Trade and Investment Agreements on Australia's Inward Fdi Flows

Crotti

Cavoli

Wilson

2010

Australian Economic Papers

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International trade and investment agreements are one of the primary instruments of global financial liberalisation. They are enacted to enhance the flows of foreign direct investment (FDI) between signatories by reducing regulatory barriers to investment; promoting stable host investment environments; and guaranteeing investors against non-commercial risk. As a net capital importer, Australia has sought to attract FDI through participation in such accords since the early 1980s. This paper examines the determinants of Australia's inward FDI flows-focussing specifically on the effects of trade and investment agreements. Using panel data, we find that both bilateral trade and bilateral and multilateral investment agreements attract FDI flows into Australia, thereby indicating that the policy of enticing FDI through participation in these accords is quite possibly effective. I . I n t r o d u c t i o n a n d S o m e S t y l i s e d F a c t sGlobal foreign direct investment (FDI) flows have increased over the past two and a half decades at a rate faster than both international trade and gross domestic product (GDP). 1 This growth has been accompanied by increased participation in international trade and investment agreements by national governments seeking to attract and retain the benefits of FDI. FDI is an important source of capital for host economies because, in addition to boosting national income, it can bring benefits in the form of international competitiveness, technological advancements, best practice management skills, and export growth.Previous research into the effect of international accords on FDI has largely concentrated on free trade agreements, overlooking the potential impact of investment agreements. 2 Indeed, according to Urata and Sasuya (2007), more research is required into the effects of international investment treaties on FDI. The few studies that have investigated this relationship have confined their analysis to developing countries, despite the majority of world FDI flows occurring between developed countries. 3 This paper assesses the effect of both investment and free trade agreements on a developed country's inflows of FDI.

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A Review of the Empirical Literature on FDI Determinants

Cited by 378 publications

References 47 publications

Do Complicated Tax Systems Prevent Foreign Direct Investment?

Do Complicated Tax Systems Prevent Foreign Direct Investment?

The Impact of EU Structural Funds on FDI

The Impact of Trade and Investment Agreements on Australia's Inward Fdi Flows

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