Does corruption relieve foreign investors of the burden of taxes and capital controls?

Shang-Jin Wei

No 2209, Policy Research Working Paper Series from The World Bank

Abstract: In a sample of fourteen source countries making bilateral investments in forty five countries, the author finds that taxes, capital controls, and corruption, all have large, statistically significant negative effects on foreign investment. Moreover, there is no robust support in the data for the"efficient grease"hypothesis - that corruption helps attract foreign investment by reducing firms'tax burden and the irritant of capital controls.

Keywords: International Terrorism&Counterterrorism; Capital Markets and Capital Flows; Decentralization; Fiscal&Monetary Policy; Economic Theory&Research; Economic Theory&Research; International Terrorism&Counterterrorism; Governance Indicators; National Governance; Capital Flows (search for similar items in EconPapers)
Date: 1999-10-31
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Citations: View citations in EconPapers (23)

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Related works:
Chapter: Does Corruption Relieve Foreign Investors of the Burden of Taxes and Capital Controls? (2000)
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