Strathprints Home | Open Access | Browse | Search | User area | Copyright | Help | Library Home | SUPrimo

Regional tax coordination and foreign direct investment

Haufler, A. and Wooton, I. (2006) Regional tax coordination and foreign direct investment. European Economic Review, 50 (2). pp. 285-305. ISSN 0014-2921

Full text not available in this repository. (Request a copy from the Strathclyde author)

Abstract

This paper analyses the effects of a regionally coordinated profit tax or location subsidy in a model with three active countries, one of which is not part of the union, and a globally mobile firm. We show that regional coordination can lead to two types of welfare gain. First, for investments that would take place in the union in the absence of coordination, a coordinated tax increase can transfer location rents from the firm to the union. Second, by internalising all of the union's benefits from foreign direct investment, a coordinated tax reduction can attract more welfare-enhancing investment than when member states act in isolation. Depending on which motive dominates, tax levels may thus rise or fall under regional coordination.

Item type: Article
ID code: 3906
Keywords: taxes, competition, foreign investment, economic growth, economics, Economic Theory
Subjects: Social Sciences > Economic Theory
Department: Strathclyde Business School > Economics
Related URLs:
    Depositing user: Strathprints Administrator
    Date Deposited: 23 Aug 2007
    Last modified: 12 Mar 2012 10:40
    URI: http://strathprints.strath.ac.uk/id/eprint/3906

    Actions (login required)

    View Item