The effect of taxes on foreign direct investment: a survey of the empirical evidence

The effect of taxes on foreign direct investment: a survey of the empirical evidence

Johannes Voget

University of Mannheim

Summary:

There has been a considerable amount of economics research into the impact of taxes on multinational companies. The main issues
examined have been the impact on location choice, investment, financial policy and the location of profit. The bulk of this research has
been undertaken by US researchers, primarily using data originating from the US. Over time this work has become more sophisticated
and has used more and more detailed data.

This survey will provide a critical summary and evaluation of existing work. Two aspects are particularly important in trying to set the
scene for the new research being commissioned. First, what are the strengths and weaknesses of existing work? The survey is likely
to be critical of some existing work, particularly in the many attempts to gauge the impact of taxes on investment decisions. Second, to
what extent does existing work provide useful information about the role of taxes in Europe?

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