Factor Mobility Nexus Regional Competition: Switzerland in Focus

Alene Agegnehu, Ayele Behaylu Fentay Setargie, Worku Dibu


Regions or countries inter in to competition between or among themselves having an aspiration of improving their jurisdiction through attracting potential firms and labors towards their country by means of reducing tax burdens imposed upon firms and overlooking environmental and other related issues. The aims this paper is to explore the essential elements that are responsible for inter-regional growth disparities and brought an intense competition between or among regions of a nation. And attempts are also done to address the question like: why factors of productions move from one place to another; and what effect does it brings for the development of inter-regional inequalities. Besides, the theoretical and conceptual explanation of factor mobility and the underlying reason responsible for the mobility of factors of productions across and within a country, the practice  of factor mobility and inter-cantonal competition with particular emphasis of Switzerland confederation  which is the oldest federation with extended autonomous of sub-national unities), and measures being taken by the confederal government to redress the ‘race to bottom effect- unproductive and imperfect tax competition’ among cantons are also discussed in detail.

Keywords: Factor mobility, revenue equalization, cost equalization, regional competition, tax harmonization

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