Foreign direct investment, tax competition and social expenditure

Holger Goerg, Hassan Molana, Catia Montagna

    Research output: Contribution to journalArticlepeer-review

    20 Citations (Scopus)


    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. (C) 2008 Elsevier Inc. All rights reserved.

    Original languageEnglish
    Pages (from-to)31-37
    Number of pages7
    JournalInternational Review of Economics and Finance (IREF)
    Issue number1
    Publication statusPublished - 2009


    • Foreign direct investment
    • Tax competition
    • Social policy


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