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The Impact Of Double Taxation Treaties On Foreign Direct Investment: Evidence From Large Dyadic Panel Data

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  • FABIAN BARTHEL
  • MATTHIAS BUSSE
  • ERIC NEUMAYER

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 In contrast to earlier approaches, we use a largely unpublished dataset on bilateral FDI stocks, covering a much larger and more representative sample of host and source countries.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.

Suggested Citation

  • Fabian Barthel & Matthias Busse & Eric Neumayer, 2010. "The Impact Of Double Taxation Treaties On Foreign Direct Investment: Evidence From Large Dyadic Panel Data," Contemporary Economic Policy, Western Economic Association International, vol. 28(3), pages 366-377, July.
    • Handle: RePEc:bla:coecpo:v:28:y:2010:i:3:p:366-377
    DOI: 10.1111/j.1465-7287.2009.00185.x
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    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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