The Dynamic Linkage between Corruption Index and Foreign Direct Investment: The Case of Developed and Developing Countries
Keywords:Corruption, Foreign Direct Investment, Developed and Developing Countries, Granger Causality Test
In today’s competitive business world, attracting foreign investment and creating investors friendly environment is highly important. MNCs invest in countries where they have the best economies of scale. Corruption is one of the factors deterring FDI from a country. The study has been undertaken to analyse the impact of corruption on the foreign direct investment of developed countries and developing countries. The study used correlation, regression and granger causality test to analyse the relationship. The study found high positive correlation between FDI and CPI for developing countries. The study observed low negative and positive correlation between FDI and CPI for developed countries. Further the study found uni directional causality from corruption index to FDI of India. The respective government can take stringent policies and regulations to curb corruption in order to attract more and more FDI.
Ahmad, M. A. (2013). Effects of corruption on foreign direct investment inflow: Some empirical evidence from less developed countries. Journal of Applied Sciences Research .
Akinlabi, A. O., Hamed, B., & A. M. (2011). Corruption, foreign direct investment and economic growth in Nigeria: An empirical investigation. Journal of Research in International Business Management, 1(9), 278-292.
Alakbarov, Y. B. (2016). Corruption and Foreign Direct Investment Inflows in Emerging Market Economies. Ecoforum.
Alemu, A. M. (2012). Effects of Corruption on FDI Inflow in Asian Economies. Seoul Journal of Economics , 387-412.
Amarandei, C. M. (2013). Corruption and Foreign Direct Investment Evidence From Central And Eastern European States. CES Working Papers, 5(3).
Aneta Bobenič Hintošová, Z. K. (2016). Does Quality of Business Environment Influence Foreign Direct Investment Inflow? A Case of Central European Countries. Central European Journal Of Management .
Ayshan Gasanova, A. N. (2017). The Assessment of Corruption Impact on the Inflow of Foreign Direct Investment . Applied Mathematics and Computer Science .
Azam, M., & Ahmad, S. A. (2013). Effects of corruption on foreign direct investment inflows: Some empirical evidence from less developed countries. Journal of Applied Sciences Research.
Basem Elmukhtar Ertimi, A. d. (2016). The Impact of Corruption on Economic Growth in OIC Countries . International Journal of Economics and Finance , 91-103.
Chande, K. A. (2014). Africa Rising: Corruption & Foreign Direct Investment Inflows . CMC Senior Theses.
Daniel Ofori, S. A.-M. (2015). Corruption, Foreign Direct Investment and Growth in Ghana: An Empirical Analysis . European Journal of Business and Management .
Habib, L. Z. (2010). Corruption And Foreign Direct Investment: What Have We Learned? . International Business & Economics Research Journal .
Hossain, S. (2016). Foreign Direct Investment (FDI) and Corruption: Is it a major hindrance for encouraging inward FDI? African Journal of Business Management,10(10), 256-269.
Ketkar, K. W., Murtuza, A., &Ketkar, S. L. (2005). Impact of Corruption on Foreign Direct Investment and Tax Revenues. Journal of Public Budgeting Accounting & Financial Management, 17(3), 313-341.
Kumar, S. P. (2015). Does Corruption in a Country Affect the Foreign Direct Investment? A Study of Rising Economic Super Powers China and India. Open Journal of Social Sciences, 3, 99-104.
Kusum W. Ketkar, A. M. (2005). Impact Of Corruption On Foreign Direct. J. Of Public Budgeting, Accounting & Financial Management, 17(3) , 313-341.
L, G. a. (2015). Corruption Distance and FDI flows into Latin America. International Business Review , 33-42.
M. Umur Toson, M. O. (2014). The Relationship Between Corruption and Foreign Direct Investment Inflows In Turkey: An Empirical Examination. Transylvanian Review of Administrative Sciences , 247-257.
Manuel Portugal Ferreira, H. C. (2013). How Corruption Matters on FDI Flows: Home and Host Country Effects .
Ohlsson, M. H. (2007). Impact of Corruption on FDI: A cross-country analysis. Master thesis within Economics.
Onokero, E. K. (2013). Corruption, Foreign Direct Investment and its Impact on Exchange Rate of the Nigerian Economy . Mediterranean Journal of Social Sciences .
Quazi, R. M. (2014). Corruption and Foreign Direct Investment in East Asia and South Asia: An Econometric Study. International Journal of Economics and Financial Issues, 4(2), 231-242.
Tokunova, S. A Comparative Study on the Effects of Corruption on FDI. Master of Economics & Business, Economics of Management and Organization .
Tomáš Evan, I. B. (2014). The Weak Relation Between Foreign Direct Investment and Corruption: A Theoretical and Econometric Study. Prague Economic Papers .
Torgler, B. D. (2010). The Consequences of Corruption: Evidence from China. Centre for Research in Economics, Management and the Arts.
Udenze, O. (2014). The Effect of Corruption on Foreign Direct Investments in Developing Countries. The Park Place Economist, 22(1).
Wei, B. S.-J. (2009). Corruption and Cross-Border Investment in Emerging Markets: Firm-Level Evidence. Journal of International Money and Finance .