Investment Distinctions: The Effect of Taxes on Foreign Direct Investment in the U.S.

  • Deborah L. Swenson
Conference paper


Most studies of taxation and foreign investment limit their investigation to the effects of tax changes on aggregate foreign investment flows. The reason is practical; little evidence is readily available that would allow researchers to consider the effects of taxes on individual firm investment decisions. However, it seems likely that this data limitation may in fact cause researchers to draw the wrong conclusions regarding the actual responsiveness of investment flows to tax differences. In part, there are reasons for firms to remain in a particular location once they have selected it once. This persistence of investment activity may cause most repeat investors to have little responsiveness to small tax differences, while newer investors will respond more vigorously.


Foreign Direct Investment Foreign Investment Agglomeration Economy Equity Increase Investment Type 
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Copyright information

© Springer Japan 1998

Authors and Affiliations

  • Deborah L. Swenson
    • 1
  1. 1.Department of Economics and NBERUniversity of California, DavisUSA

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