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… is from page 66 of Nathan Jensen’s important, data-rich 2006 book, Nation-States and the Multinational Corporation [2]:
No systematic evidence lends credence to the race to the bottom thesis. Simply no relationship exists between countries with low taxation and spending levels and higher FDI [foreign direct investment] inflows.
DBx: Regular readers of this blog will understand that I do not offer this quotation in support of higher taxation or of higher levels of government spending. Instead, I offer it in further support, against the assertions of many conservatives, of a policy of unilateral free trade. As Jensen convincingly shows, it’s simply not true that high levels of taxation or of government spending in a country are sufficient to put producers in that country at an ‘unfair’ disadvantage relative to producers in countries with lower levels of taxation or of government spending.