Bulletin n. 2/2016
December 2016
INDICE
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
  • Braymen Charles, Chang Yang-Ming, Luo Zijun
    Tax Policies, Regional Trade Agreements and Foreign Direct Investment: A Welfare Analysis
    in Pacific Economic Review , Volume 21, Issue 2, May 2016 ,  2016 ,  123–150
    In this paper, we develop a partial equilibrium three-country model to examine the relationship between regional trade agreements (RTAs) and foreign direct investment (FDI) in an environment with double taxation. Our analysis shows that FDI is welfare-improving for at least one or both of the two regional countries if wage asymmetry is significantly large. FDI and an RTA are also welfare-improving for the high-wage country and the region if the wage differential is not small. We also examine the role of repatriation taxes in affecting the determination of firm location under an RTA. Our results suggest that the signing of an RTA may induce relocation from the high-wage country to the low-wage country unless an increase in the repatriation tax rate also occurs.
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