Coordination of tax policies toward inward foreign direct investment Academic Article uri icon


  • AbstractWe study competition for foreign direct investment (FDI) between host countries and the implications of tax policy coordination between them. By reducing its tax on multinational production, a host country can attract additional FDI, some of which is diverted from other host countries. The shift in FDI causes host wages to rise while wages elsewhere fall. The host country with the lower natural attractiveness for FDI (absent intervention) adopts a smaller tax on multinational production. Coordination between hosts eliminates the FDI diversion effect and leads them to impose a harmonized FDI tax that is larger than their noncooperative tax levels.

published proceedings


author list (cited authors)

  • Glass, A. J., & Saggi, K.

citation count

  • 2

complete list of authors

  • Glass, Amy Jocelyn||Saggi, Kamal

publication date

  • March 2014