A Comparative Study of FDI and Fiscal and Economic Factors in Austria, Ireland, and Norway

Foreign Direct Investment (FDI) has become the stabilizing pillar and a significant driver of economic growth in many countries, under a variety of economic conditions, with activity increasing significantly in the past three decades. One of many key factors that has influenced the inflow of FDI is the tax regime of the country that is receiving the investments (Simões et al., 2014). Many governments are using tax incentives, exemptions and lower tax rates as a tool to lure in foreign investors and to become an attractive place to put investments (Hines, 2005). It really is not that simple, and the relationship between FDI and taxation is something that is a complex and widely spread theory, that has been researched for many years. Lower tax rates might increase the profitability of the investment, but higher tax rates might signal a better bureaucracy – and thereafter a more stable and reliable economic environment for businesses to evolve in. In this study we will take a closer look at three European countries and investigate the relationship between FDI and tax rates in each of the economies. We chose three European countries that are similar and comparable from the economic perspective. Austria, Ireland and Norway are comparable in their economic structures, geographic size and location, population, and Gross Domestic Product (GDP). Austria is a European Union (EU) member, and it serves as our reference European country in terms of FDI and studied economic indicators. Ireland is an EU member. While all three countries have comparable overall tax rates Ireland has a reputation as a tax haven due to tax policies that incentivize foreign investments with low corporate tax rates on Multinational Enterprises (MNEs) (Dharmapala & Hines, 2009). It has a significantly greater amount of FDI inflows and outflows, such that their Gross National Income (GNI) is 20% lower than their GDP. Norway is not an EU member, but it is a European Economic Area and Schengen member. While their GDP is similar to Austria their GDP per Capita is nearly double. Of the three countries Norway has the smallest amount of FDI activity.

Authors dc:creator

• Wayne Johnson, Daniel
• Johansen Nordtømme, Andreas

Advisor dc:contributor.advisor

• Zhukova, Vita

• MBA
• Comparative Study of FDI
• Fiscal and Economic
• Administración
• Administration
• Foreign Direct Investment
• La inversión extranjera directa
• FDI

Statement dc:rights

• Attribution-NonCommercial-NoDerivatives 4.0 Internacional

Licence dc:rights.uri

• http://creativecommons.org/licenses/by-nc-nd/4.0/

Language dc:language.iso

es

Handle dc:identifier.uri

http://hdl.handle.net/10952/7618

OAI identifier oai:identifier

oai:repositorio.ucam.edu:10952/7618