IDEAS home Printed from https://ideas.repec.org/p/phd/dpaper/dp_2006-20.html
   My bibliography  Save this paper

FDI Investment Incentive System and FDI Inflows: The Philippine Experience

Author

Listed:
  • Aldaba, Rafaelita M.

Abstract

This paper examines the country’s investment incentive program for foreign investors and its success in attracting substantial FDI inflows. The analysis compares the FDI incentive system and FDI performance of the Philippines with other Asian countries. Since it is difficult to untangle the effect of tax incentives from other factors, the analysis also takes into account other factors such as level of competitiveness, costs of doing business and availability of infrastructure. Our experience tends to suggest that in the absence of fundamental factors such as economic conditions and political climate, tax incentives alone are not enough to generate a substantial effect on investment decisions of investors nor can they compensate for the deficiencies in the investment environment.

Suggested Citation

  • Aldaba, Rafaelita M., 2006. "FDI Investment Incentive System and FDI Inflows: The Philippine Experience," Discussion Papers DP 2006-20, Philippine Institute for Development Studies.
    • Handle: RePEc:phd:dpaper:dp_2006-20
    as

    Download full text from publisher

    File URL: https://www.pids.gov.ph/publication/discussion-papers/fdi-investment-incentive-system-and-fdi-inflows-the-philippine-experience
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert J Rolfe & David A Ricks & Martha M Pointer & Mark McCarthy, 1993. "Determinants of FDI Incentive Preferences of MNEs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(2), pages 335-355, June.
    2. 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.
    3. Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, vol. 86(5), pages 1076-1094, December.
    4. Benjamin E. Diokno, 2005. "Reforming the Philippine Tax System: Lessons from Two Tax Reform Programs," UP School of Economics Discussion Papers 200502, University of the Philippines School of Economics.
    5. Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
    6. Louis T., Jr. Wells & Nancy J. Allen & Jacques Morisset & Neda Pirnia, 2001. "Using Tax Incentives to Compete for Foreign Investment : Are They Worth the Costs?," World Bank Publications - Books, The World Bank Group, number 13979.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mari-Len Reyes-Macasaquit, 2008. "Industrial Agglomeration in the Philippines," Development Economics Working Papers 22690, East Asian Bureau of Economic Research.
    2. Mohammad Ali & Alok K. Bohara, 2017. "How Does FDI Respond to the Size of Shadow Economy: An Empirical Analysis under a Gravity Model Setting," International Economic Journal, Taylor & Francis Journals, vol. 31(2), pages 159-178, April.
    3. Philippine Institute for Development Studies, 2008. "Industrial Agglomeration and Industrial Policies : The Philippine Experience," Development Economics Working Papers 22681, East Asian Bureau of Economic Research.
    4. Dennis Botman & Alexander Klemm & Reza Baqir, 2010. "Investment incentives and effective tax rates in the Philippines: a comparison with neighboring countries," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 15(2), pages 166-191.
    5. International Monetary Fund, 2012. "Philippines: Technical Assistance Report on Road Map for a Pro-Growth and Equitable Tax System," IMF Staff Country Reports 2012/060, International Monetary Fund.
    6. Aldaba, Rafaelita M., 2014. "Investment Liberalization and Facilitation Toward AEC 2015," Philippine Journal of Development PJD 2012 Vol. 39 Nos. 1-2, Philippine Institute for Development Studies.
    7. Macasaquit, Mari-Len R., 2008. "Industrial Agglomeration in the Philippines," Discussion Papers DP 2008-14, Philippine Institute for Development Studies.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kolasa Marcin, 2008. "How does FDI inflow affect productivity of domestic firms? The role of horizontal and vertical spillovers, absorptive capacity and competition," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 17(1), pages 155-173.
    2. Maria Cipollina & Giorgia Giovannetti & Filomena Pietrovito & Alberto F. Pozzolo, 2012. "FDI and Growth: What Cross-country Industry Data Say," The World Economy, Wiley Blackwell, vol. 35(11), pages 1599-1629, November.
    3. Argentino Pessoa, 2008. "Multinational Corporations, Foreign Investment, and Royalties and License Fees: Effects on Host-Country Total Factor Productivity," Notas Económicas, Faculty of Economics, University of Coimbra, issue 28, pages 6-31, December.
    4. Louis T., Jr. Wells & Nancy J. Allen & Jacques Morisset & Neda Pirnia, 2001. "Using Tax Incentives to Compete for Foreign Investment : Are They Worth the Costs?," World Bank Publications - Books, The World Bank Group, number 13979.
    5. Revilla, Ma. Laarni D., 2016. "Cross-Country Econometric Study on the Impact of Fiscal Incentives on Foreign Direct Investment," Research Paper Series DP 2016-17, Philippine Institute for Development Studies.
    6. Alvaro Cuervo-Cazurra & Bernardo Silva-Rêgo & Ariane Figueira, 2022. "Financial and fiscal incentives and inward foreign direct investment: When quality institutions substitute incentives," Journal of International Business Policy, Palgrave Macmillan, vol. 5(4), pages 417-443, December.
    7. Jordaan, Jacob A., 2005. "Determinants of FDI-induced externalities: New empirical evidence for Mexican manufacturing industries," World Development, Elsevier, vol. 33(12), pages 2103-2118, December.
    8. Luisa R. Blanco & Cynthia L. Rogers, 2012. "Do Tax Havens Really Flourish?," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 12(3), pages 1-23, August.
    9. Noy, Ilan & Vu, Tam B., 2007. "Capital account liberalization and foreign direct investment," The North American Journal of Economics and Finance, Elsevier, vol. 18(2), pages 175-194, August.
    10. Revilla, Ma. Laarni D., 2016. "Cross-Country Econometric Study on the Impact of Fiscal Incentives on Foreign Direct Investment," Discussion Papers DP 2016-17, Philippine Institute for Development Studies.
    11. Chen, Qiu & Maung, Min & Shi, Yulin & Wilson, Craig, 2014. "Foreign direct investment concessions and environmental levies in China," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 241-250.
    12. Laura Alfaro & Andrew Charlton, 2007. "Growth and the Quality of Foreign Direct Investment: Is All FDI Equal?," CEP Discussion Papers dp0830, Centre for Economic Performance, LSE.
    13. Céline Azémar & Rodolphe Desbordes, 2010. "Short‐run Strategies for Attracting Foreign Direct Investment," The World Economy, Wiley Blackwell, vol. 33(7), pages 928-957, July.
    14. Chor, Davin, 2009. "Subsidies for FDI: Implications from a model with heterogeneous firms," Journal of International Economics, Elsevier, vol. 78(1), pages 113-125, June.
    15. Marouane ALAYA & Dalila NICET-CHENAF & Eric ROUGIER, 2007. "FDI Promotion policies and dynamic of growth in the South East Mediterranean countries (In French)," Cahiers du GREThA (2007-2019) 2007-06, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    16. Jacob A Jordaan, 2008. "Regional Foreign Participation and Externalities: New Empirical Evidence from Mexican Regions," Environment and Planning A, , vol. 40(12), pages 2948-2969, December.
    17. Tullio Buccellato & Francesco Santangelo, 2009. "Foreign direct investments distribution in the Russian Federation: do spatial effects matter?," UCL SSEES Economics and Business working paper series 99, UCL School of Slavonic and East European Studies (SSEES).
    18. Tomáš Havránek, 2009. "The supply of foreign direct investment incentives: subsidy competition in an oligopolistic framework," Prague Economic Papers, Prague University of Economics and Business, vol. 2009(2), pages 131-155.
    19. Hassan Sallahuddin, 2018. "Fdi Oriented Exports And Role Of Free Industrial Zones In Malaysia," Post-Print hal-03455842, HAL.
    20. Jellal, Mohamed & Bouzahzah, Mohamed, 2012. "Education investissements directs étrangers et croissance économique réflexions pour le maroc [Education foreign direct investments and economic growth some thoughts for morocco]," MPRA Paper 38883, University Library of Munich, Germany.

    More about this item

    Keywords

    Foreign direct investment (FDI); investment incentives; corporate taxation;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:phd:dpaper:dp_2006-20. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Aniceto Orbeta (email available below). General contact details of provider: https://edirc.repec.org/data/pidgvph.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.