BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
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Tax rate on interest or dividends
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Potential economic growth
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Detailed explanation-1: -Similarly, the results show that GDP, public debt, and trade openness affect FDI attraction positively. In contrast, crisis situation and labor cost affect FDI attraction negatively, while the other factors have no impact, such as CPI, unemployment rate, tax rate of import and export tax.
Detailed explanation-2: -Indeed, a number of empirical studies have found FDI to be determined by various factors, such as market size, factor costs, transport costs, political environment, exchange rate, trade openness, tax rates, infrastructure, property rights and others.
Detailed explanation-3: -Theoretically, FDI in the neoclassical growth model promotes economic growth by increasing the volume of investment and/or its efficiency. In the endogenous growth model, FDI raises economic growth by generating technological diffusion from the developed world to the host country (Borensztein, Gregorio, & Lee, 1998).