Authors: Ronald B. Davies , Iulia Siedschlag , Zuzanna Studnicka
Published: June, 2016

This research provides new empirical evidence on the impact of corporate taxation and other factors on the attractiveness of Ireland and other EU countries to foreign direct investment (FDI) over the period 2002-2013. In comparison to previous analyses which have considered individual countries as alternative locations,1 we analyse groups of EU countries with similar characteristics as alternative locations for FDI. In this context, we examine the extent to which Ireland and the United Kingdom (UK) are perceived as similar alternatives with respect to factors that determine the location choice of foreign affiliates. This question is relevant in relation to a possible redirection of FDI in the case of a vote in the UK to leave the EU. In addition to identifying average effects for all FDI projects, we account for the heterogeneity of investors’ behaviour by analysing intra-EU investments and investments from outside the EU. Furthermore, we identify and quantify similarities and differences with respect to the effects of corporate taxation and of other factors on the location choice of foreign affiliates in manufacturing and services.

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