Whether corruption sands or greases the wheels of foreign direct investment: a meta-regression analysis

Adem Gök

International Review of Economics, 2023, vol. 70, issue 4, No 4, 477-501

Abstract: Abstract As a deficient form of governance, corruption hinders FDI by increasing transaction costs and uncertainty. However, the heterogeneity in findings reported from primary studies has made testing competing hypotheses about the role of corruption on FDI difficult. The paper aims to identify and, if any, measure the authentic empirical effect of corruption on FDI by conducting a meta-regression analysis based upon 616 estimation results from 81 studies. The result suggests a negative authentic empirical effect of corruption on FDI supporting the hypothesis of corruption sands the wheels of foreign direct investment. The marginal effect of corruption changes in direction and magnitude due to the type of FDI (stocks or flows), the corruption index, the estimation technique, the unit, and the time period, used in the primary studies.

Keywords: Corruption; FDI; Governance; MRA; PEESE (search for similar items in EconPapers)
JEL-codes: C31 D73 F21 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s12232-023-00428-5

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