Corruption and Foreign Direct Investment: An Empirical Analysis
نویسنده
چکیده
The present study adds a further link to the chain of studies on corruption and capital flows. It is argued here that not only does corruption reduce foreign direct investment inflows to a country, but also different forms of corruption have separately identifiable effects on the variable in question. Using data from Global Competitiveness report of the World Economic Forum, it is manifested in a cross sectional setting that (i) corruption has a negative and significant impact on the foreign direct investment inflows, and (ii) corruption in the field of import/export permits has a positive and significant impact on FDI inflows, whereas corruption in the fields of annual tax payments, access to public utilities and judicial decisions are strong deterrents against FDI. The negative association between corruption and FDI Inflows withstands the use of instrumental variables technique. JEL-Classification: F21, C21, K4
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