Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246705 
Year of Publication: 
2020
Series/Report no.: 
ADB Economics Working Paper Series No. 628
Publisher: 
Asian Development Bank (ADB), Manila
Abstract: 
How sensitive is inward foreign direct investment (FDI) from the United States (US) to developing Asia to corporate tax rates? This is a relevant question given the sweeping US tax bill effective in 2018, which provided incentives for US corporations abroad to repatriate profits. Using panel data at the country and sector level, we find that the effects are quite different across sectors, and that controlling for other factors such as market size, costs, openness, and the business environment, the corporate income tax rate differential is generally not statistically significant, including for global value chain-related FDI to developing Asia. It does have a small effect on service sectors such as financial intermediation and business services where sunk costs are small.
Subjects: 
corporate tax
FDI
fiscal policy
foreign investment
Tax and Jobs Act
sectors
JEL: 
F21
H30
H25
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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