The impact of the shadow economy on foreign direct investment

Hoang Van Cuong, Hiep Ngoc Luu and Le Quoc Tuan

Applied Economics Letters, 2021, vol. 28, issue 5, 391-396

Abstract: This study investigates the impact of the shadow economy on foreign direct investment (FDI). The result shows that the shadow economy exhibits no clear impact on FDI inflow. However, examining FDI by its types of entry, we find that the shadow economy positively influences greenfield investments and negatively affects cross-border M&As. The results are robust to a number of sensitivity checks.

Date: 2021
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DOI: 10.1080/13504851.2020.1757027

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