Foreign Direct Investment: Decisions, Determinants, and the Role of Taxation—A Survey looks at the factors that come into play in foreign investment decisions, and the role of government incentives, especially taxes.
Document Highlight
The last decade has seen phenomenal growth in foreign direct investment (FDI) worldwide, at a rate outpacing even the growth in production and international trade. While an increasing number of Canadian companies are investing in other countries, Canada’s attraction as a place for foreign investment has been decreasing. The Conference Board of Canada reviewed the literature of business experts and economists on the process and the factors that determine FDI flows.
Despite the different approaches taken, their overall findings are very similar. The traditional variables have always been recognized by both sides as the main factors in the flow of FDI. But the world has changed, especially during the last two decades. Globalization, economic integration, and falling regulatory barriers have reduced the significance of traditional variables among nations. The issue of taxes is now a serious concern in location and sourcing decisions—and is growing in importance.
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