Preferential trade agreements and tax competition for foreign direct investment

• 成果类型: Article
• 署名作者: Raff, H
• 署名单位: University of Kiel
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2004.03.002
• 发表日期: 2004
• 页码: 2745-2763
• 关键词: preferential trade agreements; Tax competition; multinational enterprises

摘要

This paper examines how free-trade agreements and customs unions affect the location of foreign direct investment (FDI) and social welfare, taking into account that governments may adjust taxes and external tariffs to compete for FDI. Conditions are identified under which a free-trade agreement leads to FDI and under which this improves welfare. The welfare effect is shown to depend on the relative size of efficiency gains in production and government revenue losses due to tax competition. A free-trade agreement may fail to induce welfare-improving 17131, creating a role for a customs union. (C) 2004 Elsevier B.V. All rights reserved.