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O výpočte fiškálneho dopadu investičnej podpory
[On calculus of fiscal impact of investment incentives]

Author

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  • Peter Bolcha

Abstract

The paper focuses on selective investment incentives. The main aim is to discuss question how to quantify net fiscal impact properly. As shown, the problem is not trivial - the proper quantification presupposes using of several parameters, accounting of costs in the economic sense of this word (i.e. also opportunity costs) and using concept of present value. Including these aspects in the calculation would correct some extremely optimistic scenarios (of studies concerning Czech economy), which claim, that fiscal incentives yield significantly high net surplus to the state budget. The parameter representing the ability of incentives to attract investors seems to be one of the most important components of the correct calculation. Another important point is a necessity of symmetric accounting: some of the other studies implement two expenditures rounds on the side of fiscal benefits, whereas they neglect the second round on the side of costs.

Suggested Citation

  • Peter Bolcha, 2008. "O výpočte fiškálneho dopadu investičnej podpory [On calculus of fiscal impact of investment incentives]," Politická ekonomie, Prague University of Economics and Business, vol. 2008(2), pages 257-274.
    • Handle: RePEc:prg:jnlpol:v:2008:y:2008:i:2:id:640:p:257-274
    DOI: 10.18267/j.polek.640
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    References listed on IDEAS

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    1. Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," EIJS Working Paper Series 168, Stockholm School of Economics, The European Institute of Japanese Studies.
    2. D Sethi & S E Guisinger & S E Phelan & D M Berg, 2003. "Trends in foreign direct investment flows: a theoretical and empirical analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(4), pages 315-326, July.
    3. Ms. Elina Ribakova & Mr. Balázs Horváth & Mr. Dimitri G Demekas & Mr. Yi Wu, 2005. "Foreign Direct Investment in Southeastern Europe: How (and How Much) Can Policies Help?," IMF Working Papers 2005/110, International Monetary Fund.
    4. Rashmi Banga, 2003. "Impact of government policies and investment agreements on FDI inflows," Indian Council for Research on International Economic Relations, New Delhi Working Papers 116, Indian Council for Research on International Economic Relations, New Delhi, India.
    5. Nigel Pain, 2002. "Fiscal Incentives, European Integration and the Location of Foreign Direct Investment," National Institute of Economic and Social Research (NIESR) Discussion Papers 195, National Institute of Economic and Social Research.
    6. Florence Hubert & Nigel Pain, 2002. "Fiscal Incentives, European Integration and the Location of Foreign Direct Investment," Manchester School, University of Manchester, vol. 70(3), pages 336-363, June.
    7. repec:bla:manchs:v:70:y:2002:i:3:p:336-63 is not listed on IDEAS
    8. Petr Kral, 2004. "Identification and Measurement of Relationships Concerning Inflow of FDI: The Case of the Czech Republic," Working Papers 2004/05, Czech National Bank.
    9. Mr. Ewe-Ghee Lim, 2001. "Determinants of, and the Relation Between, Foreign Direct Investment and Growth: A Summary of the Recent Literature," IMF Working Papers 2001/175, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    investment incentives; state aid; policy costs; fiscal accounting;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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