A pecking order of capital inflows and international tax principles

Assaf Razin, Efraim Sadka, Chi Wa Yuen*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

83 Scopus citations


Even though financial markets today show a high degree of integration, the world capital market is still far from the textbook story of high capital mobility. The purpose of this paper is to highlight key sources of market failure in the context of international capital flows and to provide guidelines for efficient tax structure in the presence of capital market imperfections. The analysis distinguishes three types of international capital flows: foreign portfolio debt investment, foreign portfolio equity investment and foreign direct investment. The paper emphasizes the efficiency of a non-uniform tax treatment of the various vehicles of international capital flows.

Original languageEnglish
Pages (from-to)45-68
Number of pages24
JournalJournal of International Economics
Issue number1
StatePublished - 1 Feb 1998


  • Asymmetric information
  • Foreign direct investment
  • Foreign portfolio debt investment
  • Foreign portfolio equity investment
  • International taxation


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