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Corruption's Effect on Foreign Direct Investment: The Case of Bosnia and Herzegovina

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  • Elvira Pupović

    (Department of Economics, University of Montenegro, Podgorica, Montenegro)

Abstract

This study introduces a new perspective on the role of corruption in investment growth and provides quantitative estimates of the impact of corruption on the investment inflows. Motivated by these issues, the main objective of this article is to empirically reexamine the effects of corruption on foreign direct investment (FDI) inflows in Bosnia and Herzegovina, by incorporating a further link between corruption and investment inflows as new understanding investment concepts. Using data from Transparency International report, World Bank and National Banking Statistical data, it is manifested in a cross sectional setting that corruption has a negative and significant impact on the foreign direct investment inflows. The new model of eliminated unexpected risk involved managing corruption's effect on investments. One has to immediately consider the linkage between corruption and investment inflows and to learn how to manage this phenomenon like old risk of a new model.

Suggested Citation

  • Elvira Pupović, 2013. "Corruption's Effect on Foreign Direct Investment: The Case of Bosnia and Herzegovina," International Journal of Sustainable Economies Management (IJSEM), IGI Global, vol. 2(3), pages 1-18, July.
    • Handle: RePEc:igg:jsem00:v:2:y:2013:i:3:p:1-18
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    File URL: http://services.igi-global.com/resolvedoi/resolve.aspx?doi=10.4018/ijsem.2013070101
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