The effect of corruption on FDI: A parametric and non-parametric analysis

Marco Barassi and Ying Zhou

European Journal of Political Economy, 2012, vol. 28, issue 3, 302-312

Abstract: This paper analyses the effect of corruption on Multinational Enterprises' (MNEs) incentives to undertake FDI in a particular country. We contribute to the existing literature by modelling the relationship between corruption and FDI using both parametric and non-parametric methods. We report that the impact of corruption on FDI stock is different for the different quantiles of the FDI stock distribution. This is a characteristic that could not be captured in previous studies which used only parametric methods. After controlling for the location selection process of MNEs and other host country characteristics, the result from both parametric and non-parametric analyses offer some support for the ‘helping-hand’ role of corruption.

Keywords: Corruption; FDI; Parametric; Non parametric; MNEs' location choice (search for similar items in EconPapers)
JEL-codes: F23 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (68)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:28:y:2012:i:3:p:302-312

DOI: 10.1016/j.ejpoleco.2012.01.001

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