Tax Competition, Foreign Direct Investments and Growth: Using the Tax System to Promote Developing Countries

Margalioth, Yoram

doi:10.2139/ssrn.462622

Cited by 21 publications

(14 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…It can therefore be argued that if investors are rational and profit maximizing, then this will lead to more investment. (Wells et al 2001;Margalioth 2003;Bolnick 2004) The theories behind lowering the cost of capital to increase investment lend some support to the rationale for developing countries to implement tax incentives. However, several aspects of tax holidays raise the question of whether or not they are beneficial in practice.…”

Section: Tax Incentives For Investmentmentioning

confidence: 99%

Rise of ineffective incentives: New empirical evidence on tax holidays in developing countries

Stausholm¹

2017

Preprint

View full text Add to dashboard Cite

Developing countries employ tax incentives in the hope of attracting investors, but questions remain on the effects of these policies. Asking whether tax incentives undermine or facilitate development, this paper investigates tax rates and tax holidays in terms of both economic and social impacts in developing countries 1985-2014 in the largest panel data set ever deployed for this purpose. The collection of new data results in three major contributions to the existing literature. First, the analysis shows that the use of tax holidays has increased over the last decade throughout all four regions surveyed: Latin America, Asia, Africa and the Caribbean. Second, the analysis finds that the effect of tax holidays on FDI is negligible and decreasing, and importantly, that it does not translate into neither real capital accumulation nor economic growth. Third, the paper then investigates how the revenue losses from tax incentives can mean real differences for human development by analyzing the effect on tax revenues, spending, health and education outcomes. The paper concludes that tax holidays are negatively correlated with tax revenues, and as revenues decrease, the spending on education decreases. This has real effects, as evidenced by a significant negative correlation with enrollment in primary education. The analysis concludes that tax holidays overall have more negative than positive impacts on sustainable development.

show abstract

Section: Tax Incentives For Investmentmentioning

confidence: 99%

Rise of ineffective incentives: New empirical evidence on tax holidays in developing countries

Stausholm¹

2017

Preprint

View full text Add to dashboard Cite

show abstract

“…Furthermore, Nunnenkamp (2002), analysing 28 developing nations from 1987 to 2000 found that FDIs are positively correlated with per capita GNP, factor costs, and years of education. According to Margalioth (2003) and Blonigen (2005), FDI inflows can be increased through tax incentives. Mansfield (1995) demonstrated that intellectual property rights (IPRs) are important for entrepreneurs of pharmaceutical sector.…”

Section: Literature Reviewmentioning

confidence: 99%

Significance of Good Governance for FDI Inflows in SAARC Countries

Shah¹,

Afridi²

2015

BER

View full text Add to dashboard Cite

This paper studies the importance of good governance for FDI inflows in SAARC member countries for the time period of nine years, i.e. from 2006 to 2014. The worldwide governance indicators of Kaufmann, Kraay, and Zoido-Lobatón (1999) are used to investigate the impact of good governance on FDI inflows. Through random effects panel estimation technique, the results show that political stability and regulatory quality significantly and positively affect inward FDI. On the contrary, prevalence of corruption discourages multinationals to invest in SAARC countries. Moreover, conventional FDI location determinants like market size and development level continue to exert their positive influence. However, openness of the host economy and human capital, though equally important, are insignificant in terms of their possible sway on FDI inflows. The key finding is that good governance has significant impact on inward FDI in the SAARC region.

show abstract

“…Crowley & Lee (2003) Campa & Goldberg (1995) Goldberg (1993) Taxes Tung & Cho (2001) Margalioth (2003 showed a negative correlation between FDI and economic growth, and stress that the estimate depends largely on the amount of human capital or education attainment in the host country.…”

Section: New Marketsmentioning

confidence: 99%

“…recent success stories of some emerging markets, notably China and Singapore, Margalioth (2003) and Tung and Cho (2001) highlighted the potential benefits of using tax incentives to entice foreign investment.…”

Section: The International Trade Journalmentioning

confidence: 99%

Cross-Country Evidence on the Effectiveness of Foreign Investment Policies

Lee

2005

The International Trade Journal

View full text Add to dashboard Cite

Tax Competition, Foreign Direct Investments and Growth: Using the Tax System to Promote Developing Countries

Cited by 21 publications

References 0 publications

Rise of ineffective incentives: New empirical evidence on tax holidays in developing countries

Rise of ineffective incentives: New empirical evidence on tax holidays in developing countries

Significance of Good Governance for FDI Inflows in SAARC Countries

Cross-Country Evidence on the Effectiveness of Foreign Investment Policies

Contact Info

Product

Resources

About