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The effect of corruption on FDI: A parametric and non-parametric analysis

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  • Barassi, Marco R.
  • Zhou, Ying
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    Abstract

    This paper analyses the effect of corruption on Multinational Enterprises' (MNEs) incentives to undertake FDI in a particular country. We contribute to the existing literature by modelling the relationship between corruption and FDI using both parametric and non-parametric methods. We report that the impact of corruption on FDI stock is different for the different quantiles of the FDI stock distribution. This is a characteristic that could not be captured in previous studies which used only parametric methods. After controlling for the location selection process of MNEs and other host country characteristics, the result from both parametric and non-parametric analyses offer some support for the ‘helping-hand’ role of corruption.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Political Economy.

    Volume (Year): 28 (2012)
    Issue (Month): 3 ()
    Pages: 302-312

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    Handle: RePEc:eee:poleco:v:28:y:2012:i:3:p:302-312

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    Web page: http://www.elsevier.com/locate/inca/505544

    Related research

    Keywords: Corruption; FDI; Parametric; Non parametric; MNEs' location choice;

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    Cited by:
    1. Arch G. Woodside & Man-Ling Chang & Cheng-Feng Cheng, 2012. "Government Regulations of Business, Corruption, Reforms, and the Economic Growth of Nations," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 11(2), pages 127-142, December.
    2. Beekman, Gonne & Bulte, Erwin H. & Nillesen, Eleonora E.M., 2013. "Corruption and economic activity: Micro level evidence from rural Liberia," European Journal of Political Economy, Elsevier, Elsevier, vol. 30(C), pages 70-79.
    3. Ledyaeva, Svetlana & Karhunen, Päivi & Kosonen, Riitta, 2013. "Birds of a feather: Evidence on commonality of corruption and democracy in the origin and location of foreign investment in Russian regions," European Journal of Political Economy, Elsevier, Elsevier, vol. 32(C), pages 1-25.
    4. Ashby, Nathan J. & Ramos, Miguel A., 2013. "Foreign direct investment and industry response to organized crime: The Mexican case," European Journal of Political Economy, Elsevier, Elsevier, vol. 30(C), pages 80-91.

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