Foreign Direct Investment and Corruption in Developing Economies: Evidence form Linear and Non-Linear Panel Causality Tests

Roland Craigwell and Allan Wright ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper aims at determining the causal relationship between FDI and corruption in 42 developing countries using linear and non linear panel methods over the period 1998 to 2009. The findings show a causal association as corruption appears to Granger caused FDI and FDI seems to Granger lead corruption using linear methods, while for weaker results are obtain using non linear methods. The general value of these results is that adequate institutional facilities must be in place in developing economies to reduce losses from corruption especially in an attempt to attract foreign direct investment.

Keywords: Panel Linear and Non-Linear Causality; Corruption; Foreign Direct Investment (search for similar items in EconPapers)
JEL-codes: C33 D73 E22 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (4)

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