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Do Countries with Similar Levels of Corruption Compete to Attract Foreign Investment? Evidence Using World Panel Data

Luisa Alamá-Sabater (), Teresa Fernández-Núñez (), Miguel Márquez () and Javier Salinas-Jimenez ()
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Luisa Alamá-Sabater: Department of Economics and Local Development Institute (IIDL), Universitat Jaume I, Campus del Riu Sec, 12071 Castelló de la Plana, Spain
Teresa Fernández-Núñez: Department of Economics, Faculty of Economics and Business Administration, University of Extremadura, 06071 Badajoz, Spain
Javier Salinas-Jimenez: Departamento de Economía y Hacienda Pública, Universidad Autónoma de Madrid, 28049 Madrid, Spain

Sustainability, 2020, vol. 12, issue 15, 1-15

Abstract: This paper examines whether foreign direct investment in one country helps to increase foreign investment in other countries with a similar degree of corruption. Our estimates are based on an unbalanced annual panel of 164 countries over the 2005–2015 period. Using spatial econometric techniques, our main findings reveal that foreign investment in one recipient country is complementary to that in countries with similar levels of corruption. Furthermore, our results point to the existence of different circuits of foreign direct capital among countries that are determined by corruption similarity. These results suggest important policy implications for countries aiming to attract foreign investment.

Keywords: foreign direct investment; sustainable development; corruption similarity; spatial econometrics (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2020
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