Corruption Heterogeneity and Foreign Direct Investment

Tuan Le

Journal of International Commerce, Economics and Policy (JICEP), 2021, vol. 12, issue 01, 1-14

Abstract: In this research, I study the relationship between bilateral Foreign Direct Investment (FDI) and difference in corruption between source and host countries. Using instrumental variables (IVs) approach, the results suggest that bilateral FDI between two countries might increase if the difference in corruption between them decreases. In addition, I find that firms from corrupt countries tend to invest abroad to exploit natural resources while those from less corrupt countries take advantage of relatively low local wages and open trade policies.

Keywords: Corruption; foreign direct investment; instrumental variables (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S1793993321500058

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