Foreign direct investment, tax competition and social expenditure

Holger Görg, Hassan Molana, Catia Montagna

    Research output: Contribution to journalArticlepeer-review

    14 Citations (Scopus)

    Abstract

    The aim of this paper is to make a first step towards studying the role of social expenditure and its interaction with corporate taxation in determining the destination of foreign direct investment (FDI) flows. Using panel data for 18 OECD countries and measuring the extent of social welfare policies by the (public social expenditure)/GDP ratio, we find strong support for the conjecture that redistributive social welfare state policies are valued by multinationals as, for instance, they may signal a government’s commitment to social stability.
    Original languageEnglish
    Pages (from-to)31-37
    JournalInternational Review of Economics & Finance
    Volume18
    Issue number1
    DOIs
    Publication statusPublished - Jan 2009

    Keywords

    • Foreign direct investment
    • Tax competition
    • Social policy

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