Policy makers are increasingly concerned about the effect of taxes on foreign direct investment (FDI). This study shows that for U.S. multinationals – in line with the findings of the majority of previous studies – a reduction in host country tax rates corresponds with higher...

We introduce bidding costs into a standard model of tax/subsidy competition between two potential host countries to attract the plant of a monopoly firm. Such a bidding cost, even if it is infinitesimal, qualitatively alters the resulting equilibrium. At most one country offers fiscal...

This paper investigates the determinants of corporate tax differentials in a tax competition model with three imperfectly integrated countries of different population sizes. Introducing a third country in a quasi-linear model of new economic geography, we show that the tax differential between...

We provide an analysis of the impact of migration on the skilled- unskilled wage gap. In particular, we show the possibility of a rise in the wage gap following the migration of skilled (unskilled ) labor.

This paper presents a two-country model of duopolistic market with vertical relations which leads to a paradoxical result: when upstream firms possess sufficient bargaining power, cost-reducing FDI may actually enhance the rival firm's profit.

It has recently been shown that the firm size distribution is initially skewed to the right and then evolves over time to become more lognormal, and argued that this is likely due to firms initially facing financial constraints, see Cabral and Mata(2003). We conjecture that, if this is true,...

Using threshold regression techniques developed by Caner and Hansen(2004),this paper examines whether the effect of foreign direct investment (FDI) on economic growth is dependent upon different absorptive capacities. There are three absorptive capacities, namely, initial GDP, human capital and...

To empirically examine the impact of foreign direct investment and socio-cultural similarity on international trade between Russia and developed economies, we estimated a gravity model using panel data from Russia and 23 OECD member countries. To deal with the problem of Jensen's inequality, in...

This paper investigates how foreign direct investment (FDI) and its interaction with business start-up regulations affect entrepreneurship in a sample of African countries. Preliminary findings obtained from longitudinal data analysis suggest that the complementarity between FDI and...

This paper broadens the scope of Foreign Direct Investment (FDI) models by deriving a gravity equation for foreign re-investment. Re-investments in foreign subsidiaries are an equally frequent and unstudied phenomenon in international economics. However, previous empirical studies estimate a...