Are Tax Havens Good Neighbours? FDI Spillovers and Developing Countries

Abstract

This paper investigates the impact of tax havens on non-tax haven countries in terms of foreign direct investment (FDI). We analyze the importance of agglomeration effects by including FDI inflow levels in tax havens and capture geographic spillovers by measuring proximity to the nearest tax haven. Our analysis yields several interesting findings. First, using panel data for 142 countries, we find evidence of positive spillovers from tax havens to nearby developing countries, but not to nearby developed countries. Second, restricting our panel to developing countries, we find the positive effect of tax haven FDI on developing countries to be robust. Third, we find that geographic distance matters for financial flows: developing countries which are the closest to a nearby tax haven benefit the most in terms of FDI inflows. This result is robust to accounting for spatial interdependence of FDI.     

Drilling Deeper: A Systematic,Context-Sensitive Investigation of Causal Mechanisms in the Oil–Conflict Link

Abstract

This article employs an innovative methodology to study causal mechanisms in the oil–conflict link by combining a systematic approach with taking into account country details. Engaging in a deductive test of causal mechanisms in a controlled comparison of four major oil exporters, results show that no oil-related causal mechanism can fully explain the differences in violence. A more inductive analysis complemented by process tracing suggests a more comprehensive mechanism: oil contributes to the formation of opposition through grievances. Levels of violence, however, vary largely according to non-oil conditions – particularly the cohesiveness of opposition and the reaction of government to challengers.