The Effect of Non-Tax Variables on Foreign Direct Investment: Evidence from Korea

This study explores policy insights toward boosting inbound foreign direct investment (FDI) in relation to the existing targeted tax incentives. One crucial finding shows that non-tax variables compared to the current tax variables play a key role in attracting FDI. Improving the investment environments and reducing the current ‘targeted tax incentives’ for foreign capital would encourage inbound FDI and secure tax equity as well as fiscal soundness by preventing the undesirable ‘rent-seeking activities’ employed by multinational enterprises.