TAX POLICY OF TRANSITION COUNTRIES IN A GLOBAL FRAMEWORK: AN EMPIRICAL ANALYSIS ON INWARD FDI

The main purpose of this paper is to detect how fiscal policy could influence foreign direct investment (FDI) inward within transition economies, taking into account a country's openness index and its ability to sign bilateral agreements. Hence, the paper reviews the empirical evidence for the hypothesis in which fiscal policy, the openness index, and the number of bilateral agreements signed by each country will lead to relocation of FDI inward within transition countries. The relationship between fiscal and opening policies and economic variables is investigated in the third section by comparing observations across space and over time; pooling time series cross-section analysis, fixed and random effects, to analyze these dimensions simultaneously. The same model has been tested using a Neural Networks-GMDH. The same model is tested with 2 different tools because they perform differently in quantitative and qualitative terms, coming up from the structural, economic and social heterogeneity.