Bureaucratic Corruption, MNEs and FDI

Tobias Dahlström (tobias.dahlstrom@pubcare.uu.se) and Andreas Johnson (johnson_andreas@hotmail.com)

No 82, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: This paper adds to the limited number of studies analysing the relationship between host country corruption and FDI inflows. A model describes the incentives foreign MNEs and host country bureaucrats have for engaging in corruption and shows how corruption increases the MNE costs of operations in the host country. The model predicts that the costs caused by corruption reduce FDI inflows. Regression analysis using panel data finds that host country corruption has a significant negative effect on FDI inflows to developing economies but not for developed economies.

Keywords: corruption; foreign direct investment; multinational enterprises (search for similar items in EconPapers)
JEL-codes: D73 F21 F23 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2007-02-13
New Economics Papers: this item is included in nep-int and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:cesisp:0082

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