Quotation Leibrecht, Markus, Bellak, Christian, Römisch, Roman. 2007. On the appropriate measure of the tax burden on Foreign Direct Investment to the CEECs. Applied Economics Letters 14 (8): 606-609.




We argue from a conceptual and empirical point of view that tax-rate elasticities of foreign direct investment (FDI) to Central and East European Countries (CEECs) derived from statutory tax rates (STRs) are likely to be flawed. STRs are problematic measures of tax burden as they capture neither tax base effects, nor effects of the home country or international and supranational tax laws. From an empirical point of view STRs are questionable as their behavior over time and between countrypairs may differ from that of the conceptually superior bilateral corporate effective average tax rates (BCEATRs) of the Devereux-Griffith type. The variability of host-country STRs and BCEATRs of seven major home countries of FDI in eight major CEEC host countries is compared via Levene-tests for 1995–2005. Results indicate that using STRs instead of BCEATRs in empirical investigations of FDI is likely to result in tax-rate elasticities which are too low in absolute value.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Applied Economics Letters
Citation Index SSCI
WU Journalrating 2009 A
Language English
Title On the appropriate measure of the tax burden on Foreign Direct Investment to the CEECs
Volume 14
Number 8
Year 2007
Page from 606
Page to 609
Reviewed? Y


Leibrecht, Markus (Former researcher)
Bellak, Christian (Details)
Römisch, Roman (Austria)
Department of Economics (Sausgruber) (Details)
Research Institute for International Taxation FI (Details)
Department of Economics (Weiss) (Details)
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