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Impact of Tax Incentives on Foreign Direct Investment: Evidence from Africa

doi: 10.3390/su13158661
African countries have faced competition and several challenges to attract foreign direct investment given the role that FDIs play in the development process. Several efforts made have been futile because of numerous factors that play against the business environment for foreign investments. Our paper analyses the influence of tax incentives on foreign direct investment in African economies based on data from 2000–2018. We utilized panel data on forty (40) African countries and an econometric model of four proxies of tax incentives, after controlling other variables, with robust Random Effect as our discussion estimator. Our results revealed that FDI responds to lower corporate income tax (CTR). Furthermore, foreign direct investment predominates in African economies with longer tax holidays and withholding tax. However, tax concession is insignificant to the inflows of FDIs in Africa. Summarizing, our results recommend that without proper restructuring of the tax incentives to deal with policy lapses by the governments of Africa, achieving the four main goals, i.e., poverty eradication, sustainable growth and development, African integration in the competitive global economy, and women empowerment, will be hindered.
- University of South Bohemia in České Budějovice Czech Republic
- University of South Bohemia in České Budějovice Czech Republic
- Czech University of Life Sciences Prague Czech Republic
tax holiday, Environmental effects of industries and plants, corporate tax rate, foreign direct investment, TJ807-830, tax incentives, TD194-195, Renewable energy sources, panel data, Environmental sciences, tax concession, GE1-350
tax holiday, Environmental effects of industries and plants, corporate tax rate, foreign direct investment, TJ807-830, tax incentives, TD194-195, Renewable energy sources, panel data, Environmental sciences, tax concession, GE1-350
citations This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).16 popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.Top 10% influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).Top 10% impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.Top 10%
