Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70176
Authors: 
Raudonen, Svetlana
Freytag, Andreas
Year of Publication: 
2012
Series/Report no.: 
Jena Economic Research Papers 2012,060
Abstract: 
The article analyzes FDI inflows into Baltic countries using a gravity approach. The results of the empirical estimation allow us to explain how difference in corporate taxation between countries, geographical and cultural distance, institutions such as regulations and the size of the economy as well as its economic development affect FDI inflows into the Baltic countries. The influence of corporate taxation on FDI flows, expressed as corporate tax rate differences between investor and host countries is statistically significant. Larger geographical distance between the countries reduces FDI flows, and institutional variables such as the economic freedom index have significant impact and affect positively FDI into the Baltics. Finally, the size of economy, measured by GDP, impacts positively the FDI flows into Baltic countries.
Subjects: 
gravity model
foreign direct investments
corporate tax
Baltic countries
JEL: 
E2
F2
H2
Document Type: 
Working Paper

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