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Effective tax rates as a determinant of foreign direct investment in Central- and East European countries. A panel analysis.

Bellak, Christian and Leibrecht, Markus (2005) Effective tax rates as a determinant of foreign direct investment in Central- and East European countries. A panel analysis. Discussion Papers SFB International Tax Coordination, 7. SFB International Tax Coordination, WU Vienna University of Economics and Business, Vienna.

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Abstract

The Central- and East European Countries have lowered their corporate tax rates substantially in order to induce shifts of production capacity to their countries. This paper analyses empirically how inward Foreign Direct Investment (FDI) flows channeled to these countries reacts to these tax policies. We estimate a panel of 35 bilateral country-relationships over a period of 1995-2002. Results suggest a semielasticity of -2.93 which is in line with results derived in studies mainly on OECD countries. This indicates that from an individual country perspective, tax-lowering strategies have been successful in the past, yet they may not be a successful policy option for the future when privatization-related FDI will decrease. (author's abstract)

Item Type: Paper
Keywords: taxation / foreign direct investment / multinational enterprises / transformation economies
Classification Codes: RVK QL 800 ; JEL F21, H25
Divisions: Departments > Finance, Accounting and Statistics > Accounting and Auditing > Betriebswirtschaftliche Steuerlehre
Departments > Volkswirtschaft
Departments > Öffentliches Recht und Steuerrecht > Österr. und Internat. Steuerrecht
Depositing User: Repository Administrator
Date Deposited: 23 Sep 2005 12:58
Last Modified: 19 Jul 2015 01:31
URI: http://epub.wu.ac.at/id/eprint/1572

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