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Seoul Journal of Economics - Vol. 38 , No. 2
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Seoul Journal of Economics - Vol. 38, No. 2, pp. 137-158
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 31 May 2025
Received 17 Jan 2025 Revised 22 Mar 2025 Accepted 08 Apr 2025
DOI: https://doi.org/10.22904/sje.2025.38.2.001

Multilateral Corporate Tax Cuts, Agglomeration, and Endogenous Growth
Wataru Johdo
Faculty of Economics, Tokyo Keizai University, 1-7-34 Minamicho, Kokubunji-shi, Tokyo, 185-8502, Japan, Tel: +81-042-328-7937 (johdo@tku.ac.jp)

Funding Information ▼

JEL Classification: F43, H25, O33, O41

Abstract

This study examines the impact of multilateral corporate tax cuts on the international location of firms and world growth rate. This research demonstrates that corporate tax cuts result in the relocation of firms from a capital-rich country, which is characterized by agglomeration, to a capital-poor country, which is not characterized by this tendency. In circumstances where the scale of firms leaving an agglomerated country for a non-agglomerated one is low, corporate tax cuts result in an increase in world growth rate. Conversely, when such relocation flows of firms are significant, corporate tax cuts lead to a decline in world growth rate.

Keywords: Corporate tax cuts, Knowledge spillover, Agglomeration, Growth
Acknowledgments

I am grateful to the two anonymous referees for their helpful comments and suggestions. The financial support of Tokyo Keizai University is gratefully acknowledged.

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