FOREIGN DIRECT INVESTMENT AND CORRUPTION IN EGYPT: A COINTEGRATION ANALYSIS

Eman Moustafa ()
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Eman Moustafa: General Authority for Investment and Free Zones

No 1408, Working Papers from Economic Research Forum

Abstract: This paper uses a time series analysis to estimate the impact of corruption on FDI in Egypt during the period 1970-2019 and to address some of the drawbacks of the empirical literature. Unit root and cointegration tests are used to ensure stationarity and long run relationship among variables of interest. The results show a significant positive relationship between FDI and corruption in Egypt. Since corruption is not found to hinder FDI inflows, treating corruption should be based on sound legal procedures that infringe neither on the freedom of FDI nor on the degree of openness of the economy, which are the real stimulants of FDI in Egypt.

Pages: 32
Date: 2020-10-20, Revised 2020-10-20
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Published by The Economic Research Forum (ERF)

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