Is There a Relationship Between Transparency in Economic and Political Systems and Foreign Direct Investment Flows?

José Caetano () and António Caleiro

The IUP Journal of Applied Economics, 2009, vol. VIII, issue 2, 45-58

Abstract: : By using information for a vast number of countries, concerning inward Foreign Direct Investment (FDI) performance and perceived level of corruption, the paper analyzes how transparency, as a reverse measure of corruption, influences FDI. This is done by a fuzzy logic approach in order to determine conceivable clusters in the FDI-transparency space. In two different periods, the use of fuzzy clustering techniques reveals the existence of two well-defined clusters: one is formed by the countries having high-level corruption, where, indeed, transparency is positively correlated, in a significant way, to FDI, and the other is formed by the countries having low-level corruption, where the influence of corruption on FDI is not so evident.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjae:v:08:y:2009:i:2:p:45-58

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