FACTORS AFFECTING ALLOCATION OF CZECH FDI IN EU COUNTRIES

Abstract

The main objective of this paper is to analyse which factors have an impact on the allocation of Czech foreign direct investment (FDI) in EU countries. Multivariate panel regression with general macroeconomic variables and time dummy variables using Eurostat data for the period 2013-2019 was performed. Indicators of a tax system promoting and/ or enabling aggressive tax planning, and other more general indicators were included in the model. This paper provides the opposite view by analysing the flow of FDI from a transition economy to more advanced economies. The results suggest that Czech FDI is placed in developed countries with lower statutory corporate income tax rates, and with which the Czech Republic has a larger volume of foreign trade. Furthermore, it is confirmed that the factors affecting allocation of Czech FDI in the EU are the distance between the capital cities and the existence of the so-called patent box regime.