This paper reports on a study of Taiwan s foreign direct investment (FDI) flows into fourteen host countries over the period 1987-97. The study investigates the determinants of this FDI, focusing on the role of trade and fiscal incentives offered by host countries. The results confirm that education expenditures, economic affairs expenditures, exports, fiscal deficit/surplus, and Gross Domestic Product per capita play a major role in attracting FDI into both capital-intensive and labour-intensive industries. Policy instruments are more effective in attracting FDI into capital-intensive industries than into labour-intensive industries.
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