THE IMPACT OF DOUBLE TAXATION TREATIES ON FOREIGN DIRECT INVESTMENT: EVIDENCE FROM LARGE DYADIC PANEL DATA |
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| Authors: | FABIAN BARTHEL MATTHIAS BUSSE ERIC NEUMAYER |
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| Affiliation: | 1. Barthel: Department of Geography and Environment, London School of Economics and Political Science (LSE), Houghton Street, London WC2A 2AE, United Kingdom. E‐mail f.barthel@lse.ac.uk;2. and Hamburg Institute of International Economics (HWWI);3. Busse: Faculty of Economics, Ruhr University of Bochum, Universitaetsstr. 159, GC 3/145, 44801 Bochum, Germany. Phone +49‐234‐32 22902, Fax +49‐234‐32 14520, E‐mail matbusse@gmx.de;4. Neumayer: Head of Department and Professor of Environment & Development, Department of Geography and Environment, London School of Economics and Political Science (LSE), Houghton Street, London WC2A 2AE. Phone +44‐20‐7955‐7598, Fax +44‐20‐7955‐7412, E‐mail E.Neumayer@lse.ac.uk. |
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| Abstract: | To increase inward foreign direct investment (FDI), policy makers increasingly resort to the ratification of double taxation treaties (DTTs). However, the effectiveness of DTTs in inducing higher FDI is still open to debate, as the empirical evidence of existing studies is anything but conclusive. In contrast to earlier approaches, we use a largely unpublished dataset on bilateral FDI stocks, covering a much larger and more representative sample of host and source countries. Controlling for standard determinants of FDI and employing various econometric specifications, our results indicate that DTTs do lead to higher FDI stocks and that the effects are substantively important as well. |
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