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Factors Affecting Allocation of Czech FDI in EU Countries

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  • Veronika Síbrtová

Abstract

The main objective of this paper is to analyse which factors have an impact on the allocation of Czech foreign direct investment (FDI) in EU countries. Multivariate panel regression with general macroeconomic variables and time dummy variables using Eurostat data for the period 2013-2019 was performed. Indicators of a tax system promoting and/or enabling aggressive tax planning, and other more general indicators were included in the model. This paper provides the opposite view by analysing the flow of FDI from a transition economy to more advanced economies. The results suggest that Czech FDI is placed in developed countries with lower statutory corporate income tax rates, and with which the Czech Republic has a larger volume of foreign trade. Furthermore, it is confirmed that the factors affecting allocation of Czech FDI in the EU are the distance between the capital cities and the existence of the so-called patent box regime.

Suggested Citation

  • Veronika Síbrtová, 2022. "Factors Affecting Allocation of Czech FDI in EU Countries," Politická ekonomie, Prague University of Economics and Business, vol. 2022(6), pages 664-683.
    • Handle: RePEc:prg:jnlpol:v:2022:y:2022:i:6:id:1367:p:664-683
    DOI: 10.18267/j.polek.1367
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    References listed on IDEAS

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    1. Thiess Buettner & Michael Overesch & Georg Wamser, 2018. "Anti profit-shifting rules and foreign direct investment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(3), pages 553-580, June.
    2. Abdullah Alam & Syed Zulfiqar Ali Shah, 2013. "Determinants of foreign direct investment in OECD member countries," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 40(4), pages 515-527, August.
    3. Michael Overesch & Georg Wamser, 2009. "Who Cares About Corporate Taxation? Asymmetric Tax Effects on Outbound FDI," The World Economy, Wiley Blackwell, vol. 32(12), pages 1657-1684, December.
    4. Abdullah Alam & Syed Zulfiqar Ali Shah, 2013. "Determinants of foreign direct investment in OECD member countries," Journal of Economic Studies, Emerald Group Publishing, vol. 40(4), pages 515-527, August.
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    More about this item

    Keywords

    Corporate taxation; FDI; tax factors; aggressive tax planning;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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