Foreign Direct Investment and Tax Competition

by John Mutti

Overview

The author first assesses the nature and extent of the international mobility of foreign direct investment (FDI), based on the operations of US multinational corporations abroad (production, employment, and capital stock), not simply on financial flows of foreign affiliates. He considers whether distinctions between horizontal and vertical integration can be applied to operations in developed versus developing countries and whether either form of integration is sensitive to tax and cost conditions, not only in the host country but also in the United States. Growing sensitivity of FDI to taxes is one reason for governments to be concerned about tax competition among jurisdictions to attract economic activity. Tax competition, however, also arises from an attempt to shift the tax base from one jurisdiction to another, with no real change in the location of real activity. Mutti's second objective is to assess how tax competition is affecting the structure of national tax systems and whether efforts at international coordination of tax policy are likely to affect the progression of such changes.

Product Details

ISBN-13:	9780881323528
Publisher:	Peterson Institute for International Economics
Publication date:	01/01/2004
Series:	Policy Analyses in International Economics
Edition description:	New Edition
Pages:	120
Product dimensions:	6.00(w) x 9.00(h) x (d)
Age Range:	18 Years

About the Author

John H. Mutti is a professor of economics at Grinnell College. His research interests include international trade, and investment and tax policy.