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Tax Policy and FDI Effects on Economic Growth: A DCCE Analysis of European OECD Economies

Olgica Glavaški & Marina Beljić

Hacienda Pública Española / Review of Public Economics2026https://doi.org/10.7866/hpe-rpe.26.1.4article
AJG 1
Weight
0.50

What the paper says

This paper examines the effects of tax competition and foreign direct investment (FDI) on GDP growth across 22 European OECD economies from 1998 to 2021. Using the Dynamic Common Correlated Effects (DCCE) framework and CS-ARLD method of estimation, findings show that a lower effective average tax rate (EATR) and FDI increase positively impacts GDP growth, with stronger long-run effects. Emerging economies rely more on tax competition, whereas in developed ones, its effects weaken over time. If EATR is reduced to 15%, tax competition may not harm GDP growth, highlighting the need for policymakers to assess future threshold adjustment carefully.

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https://doi.org/https://doi.org/10.7866/hpe-rpe.26.1.4

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@article{olgica2026,
  title        = {{Tax Policy and FDI Effects on Economic Growth: A DCCE Analysis of European OECD Economies}},
  author       = {Olgica Glavaški & Marina Beljić},
  journal      = {Hacienda Pública Española / Review of Public Economics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.7866/hpe-rpe.26.1.4},
}

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Tax Policy and FDI Effects on Economic Growth: A DCCE Analysis of European OECD Economies

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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