The Impact of Tax Incentives on the Foreign Direct Investment (FDI) Net Inflow in OIC Countries

One of the important issues in the economic literature is the impact of tax incentives on the investment and specifically FDI. So the aim of this paper is to investigate the effects of tax incentives on the FDI net inflow in 57 OIC countries over the period of 1995-2010. By using spatial auto regressive and the econometric model، it has been estimated for these countries. The empirical findings of this study reveal that the tax rate has negative and other explanatory variables such as real effective exchange rate، trade openness and GDP per capita have positive and significant effects on the FDI attraction. Overall، the main policy implication of this paper suggest that، in these countries reduction in tax rate can be resulted to the increase of FDI and economic growth.