Abstract This study provides additional evidence regarding how investors perceive the importance of selected tax incentives relative to several nontax incentives in making specific investment location decisions. The decision modeling approach used in the study overcomes limitations inherent in prior survey and econometric studies. Managers involved in offshore export-oriented investment decisions were asked to assess the relative importance of two tax factors (tax holiday and import duty exemptions) and three nontax factors (wage rate, quality of infrastructure, and host country dividend remittance policy) in their decision to locate a light manufacturing operation in the Caribbean Basin. The results indicate that tax incentives alone were not able to overcome unfavorable nontax factors. However, in cases in which the nontax factors were generally favorable, the evidence suggests that the two tax variables were likely to have an influence in the location decision.
Rolfe et al. (Sun,) studied this question.
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