Resource title

Taxes and infrastructure as determinants of Foreign Direct Investment in Central and Eastern European Countries revisited: New evidence from a spatially augmented gravity model

Resource image

image for OpenScout resource :: Taxes and infrastructure as determinants of Foreign Direct Investment in Central and Eastern European Countries revisited: New evidence from a spatially augmented gravity model

Resource description

A bulk of empirical literature has emerged that explores the role of various location factors as determinants of Foreign Direct Investment (FDI) in Central and Eastern European Countries (CEECs). A notable feature of these studies is that their empirical approaches abstract from third-country (spatial) effects in FDI across the home and host country dimensions. Neglecting these effects could bias results concerning the role of location factors for attracting FDI. This in turn may lead to misguided economic policy conclusions. The current paper adds to the literature by applying the recently proposed spatial "origin-destinationow model" of LeSage and Pace (2008) to FDI ows from 7 Western OECD home countries to 8 CEE host countries. Controlling for country-pair and time effects our results indicate that (a) spatial interactions across the host country dimension matter for FDI revealing that vertical complex FDI ows dominate total FDI ows to CEECs; (b) spatial autocorrelation in the home country dimension is absent; (c) results of previous studies remain valid as coefficient estimates on location factors change only slightly when spatial interdependencies are considered and (d) effective corporate income taxes and the endowment with production-related material infrastruc- ture are statistically and economically signifficant determinants of FDI in CEECs. (author's abstract) ; Series: Discussion Papers SFB International Tax Coordination

Resource author

Markus Leibrecht, Aleksandra Riedl

Resource publisher

Resource publish date

Resource language

en

Resource content type

application/pdf

Resource resource URL

http://epub.wu.ac.at/2949/1/workingpaper42_leibrecht_online.pdf

Resource license

Adapt according to the license agreement. Always reference the original source and author.