Abstract
AbstractPrevious empirical studies suggest that fiscal decentralisation, measured by the number of government layers, is associated with less foreign direct investment (FDI). With an improved dataset on the tax autonomy of sub‐federal government tiers, we present evidence that fiscal decentralisation (de facto) does not reduce FDI. If local governments can set their tax rates and bases autonomously, they attract more FDI. Analysing 128,425 corporate cross‐border acquisitions (CBA), between 194 source and 215 host jurisdictions from 1997 to 2021, we find that full taxation autonomy by subnational governments can double the number of CBAs in a given year. These results apply to high‐income hosts and do not depend on specific periods.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
