Link to the University of Pittsburgh
Link to the University Library SystemContact us link
AEI Banner

Central and Peripheral Regions in Europe: Can Tax Competition Attract Foreign Direct Investment Forever? ACES Cases No. 2006.3

Sergi, Bruno S. (2006) Central and Peripheral Regions in Europe: Can Tax Competition Attract Foreign Direct Investment Forever? ACES Cases No. 2006.3. UNSPECIFIED.

[img]
Preview
PDF
Download (354Kb) | Preview

    Abstract

    This paper studies the linkage between tax competition and foreign investment in Europe. Although the majority of economists consider a link between these two phenomena to be unambiguous, the literature ignores its long-term implications. To gauge the economic rationale of this issue, the paper considers experience in western and eastern Europe, which are understood as "central" versus "peripheral" regions, respectively, and distinguishes between short- and longterm perspectives. In this paper, it is argued that policymakers, who want to attract foreign investment but have incomplete information over optimal taxation policy, may be inspired to initiate cuts in tax rates. Because other countries may be tempted to respond similarly, a dynamic tax- policy response would cause methodical tax rivalry among peripheral regions, as well as between peripheral and central regions. The current reality in Europe shows that tax competition benefits peripheral regions in the short-term but that a continuing tax competition would make short-term tax advantages to peripheral regions either disappear or exert negligible weight on international investment decisions over the long-term.

    Export/Citation:EndNote | BibTeX | Dublin Core | ASCII (Chicago style) | HTML Citation | OpenURL
    Social Networking:
    Item Type: Other
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > tax policy
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > American Consortium on European Union Studies > ACES Cases
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 08 May 2009
    Page Range: p. 31
    Last Modified: 15 Feb 2011 18:01
    URI: http://aei.pitt.edu/id/eprint/9574

    Actions (login required)

    View Item

    Document Downloads