Does corruption matter for sources of foreign direct investment?

Adiya Belgibayeva () and Alexander Plekhanov
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Adiya Belgibayeva: Birkbeck, University of London

Review of World Economics (Weltwirtschaftliches Archiv), 2019, vol. 155, issue 3, No 3, 487-510

Abstract: Abstract The paper provides a cross-country empirical analysis of the impact of corruption on foreign direct investment flows. The gravity model augmented with joint effects of corruption in the origin and destination countries determines differentiated patterns of investment flows between countries with various levels of control of corruption. The estimates point towards greater investment flows between countries with good control of corruption. Moreover, if control of corruption in the destination country improves, investment flows from cleaner countries rise more strongly than those from countries with a higher incidence of corruption. The resulting shift towards a greater share of investment from low-corruption countries may further reinforce the strengthening of economic and political institutions that keep corruption in check.

Keywords: Corruption; Foreign direct investment; Gravity model (search for similar items in EconPapers)
JEL-codes: F21 O43 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (15)

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Working Paper: Does Corruption Matter for Sources of Foreign Direct Investment? (2016)
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DOI: 10.1007/s10290-019-00354-1

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