Do Bilateral Tax Treaties Promote Foreign Investment?

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Date

2001-06-01

Authors

Blonigen, Bruce A.
Davies, Ronald B.

Journal Title

Journal ISSN

Volume Title

Publisher

University of Oregon, Dept. of Economics

Abstract

We explore the impact of bilateral tax treaties on foreign direct investment using data from OECD countries over the period 1982-1992. We find that recent treaty formation does not promote new investment, contrary to the common expectation. For certain specifications we find that treaty formation may actually reduce investment as predicted by arguments suggesting treaties are intended to reduce tax evasion rather than promote foreign investment.

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Keywords

Economics, Tax treaties, Foreign investment

Citation