Global Tax Governance, Tax Competition, and Growth Models

Lucinda Cadzow

Corporate tax competition between states is an extensive and well-researched topic of political economy. While states pursue a multitude of policies to attract inward investment, developing a favorable tax regime is often an important element of this strategy. The growth models literature has already conceptualized a subset of countries that derive a significant amount of growth from attracting foreign capital. This project expands on this work by exploring how international pressures interact with the tax competitive elements of these countries’ growth strategies. More specifically, it examines how the strategies fare under recent developments in international tax governance. This is increasingly important as, since the global financial crisis, there has been significant international pressure on all countries to address base-eroding profit shifting by multinationals. By bringing the growth models and the tax competition literatures together, the project examines what impacts recent global initiatives have had on this subset of countries’ growth strategies, and how important national “growth coalitions” within these states react to recent international developments.