katherines article for mgmt

katherines article for mgmt - foreign investors have learnt...

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Estonia Group Heidi Haslip, Nick Jordan, Katie McKie, Winnie Chan Investment Climate Report Assignment #2 Title: Cheap allure. Source: Economist ; 10/2/2004, Vol. 372 Issue 8395, p52-52, 1/2p This article is about how low labor costs may matter more than low corporate taxes in central Europe. The French and Germans fear that competition from the east will force them to cut their own tax rates, or lose jobs and investment. In Poland and Slovakia, the corporate-tax rate is 19%, half the effective rate in Germany. Estonia levies no tax at all on reinvested profits. This article then discusses how central Europe can feel a little bit at ease knowing that more
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Unformatted text preview: foreign investors have learnt about their low corporate taxes. Labor costs are between five and 12 times lower in central Europe than in Germany. For many goods, central Europe is a cheaper manufacturing base than China, thanks partly to lower shipping costs. The question is why more foreign firms arent flocking in. One complaint is that small companies still feel uneasy about central Europe's business environment. They worry that governments and regulations change too often, and they find public agencies inefficient and unresponsive....
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