The influence of foreign factor prices and international taxation on fixedinvestment in the UK

This paper examines the influence of foreign factor prices and internationa l corporate taxation on fixed investment in the UK manufacturing sector. Th e evidence suggests that factor prices affect fixed investment in the UK th rough their influence on international competitiveness rather than the fact or mix decision. There also appears to be a significant effect of tax compe titiveness on the rate of investment. Empirical evidence suggests that poli cy to increase investment be aimed at reducing the average rate rather than the marginal rate of corporation tax.