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Does Foreign Direct Investment Decrease Corruption?

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Author Info

  • Felipe Larraín

    ()
    (Instituto de Economía)

  • José Tavares

Abstract

This paper assesses the effect of openness on corruption, using foreign direct investment (FDI) inflows as a measure of openness, after trade intensity is accounted for. We use a broad cross section of countries over the period 1970 to 1994 and address th

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Bibliographic Info

Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía-Latin American Journal of Economics.

Volume (Year): 41 (2004)
Issue (Month): 123 ()
Pages: 217-230

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Handle: RePEc:ioe:cuadec:v:41:y:2004:i:123:p:217-230

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Related research

Keywords: Foreign Direct Investment; Corruption; International Trade; Istrumental Variables;

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References

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  1. Philip R. Lane & Aaron Tornell, 1997. "Voracity and Growth," Harvard Institute of Economic Research Working Papers 1807, Harvard - Institute of Economic Research.
  2. Shang-Jin Wei, 2000. "Natural openness and good government," Policy Research Working Paper Series 2411, The World Bank.
  3. Neeman, Zvika & Paserman, Daniele & Simhon, Avi, 2003. "Corruption And Openness," Discussion Papers 14977, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
  4. Vito Tanzi, 1998. "Corruption Around the World," IMF Working Papers 98/63, International Monetary Fund.
  5. Andrei Shleifer & Robert W. Vishny, 1998. "The Quality of Government," Harvard Institute of Economic Research Working Papers 1847, Harvard - Institute of Economic Research.
  6. Vito Tanzi & Hamid Reza Davoodi, 1997. "Corruption, Public Investment, and Growth," IMF Working Papers 97/139, International Monetary Fund.
  7. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  8. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
  9. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
  10. Barro, Robert J. & Lee, Jong-Wha, 1994. "Sources of economic growth," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 1-46, June.
  11. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
  12. Gatti, Roberta, 1999. "Corruption and trade tariffs, or a case for uniform tariffs," Policy Research Working Paper Series 2216, The World Bank.
  13. Carlos Leite & Jens Weidmann, 1999. "Does Mother Nature Corrupt," IMF Working Papers 99/85, International Monetary Fund.
  14. Brock, William A & Magee, Stephen P, 1978. "The Economics of Special Interest Politics: The Case of the Tariff," American Economic Review, American Economic Association, vol. 68(2), pages 246-50, May.
  15. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
  16. Rose-Ackerman, Susan, 1975. "The economics of corruption," Journal of Public Economics, Elsevier, vol. 4(2), pages 187-203, February.
  17. Shang-Jin Wei, 1997. "Why is Corruption So Much More Taxing Than Tax? Arbitrariness Kills," NBER Working Papers 6255, National Bureau of Economic Research, Inc.
  18. Bhagwati, Jagdish N & Srinivasan, T N, 1980. "Revenue Seeking: A Generalization of the Theory of Tariffs," Journal of Political Economy, University of Chicago Press, vol. 88(6), pages 1069-87, December.
  19. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
  20. Bliss, Christopher & Di Tella, Rafael, 1997. "Does Competition Kill Corruption?," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 1001-23, October.
  21. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
  22. Vito Tanzi, 1994. "Corruption, Governmental Activities, and Markets," IMF Working Papers 94/99, International Monetary Fund.
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Citations

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Cited by:
  1. Asongu, Simplice A & Jellal, Mohamed, 2013. "On the channels of foreign aid to corruption," MPRA Paper 49378, University Library of Munich, Germany, revised 28 Aug 2013.
  2. Karpaty, Patrik & Tingvall, Patrik Gustavsson, 2011. "Offshoring of Services and Corruption: Do Firms Escape Corrupt Countries?," Working Paper Series in Economics and Institutions of Innovation 243, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  3. Tingvall, Patrik Gustavsson, 2010. "Offshoring and Corruption: Does Corruption Matter," Working Paper Series in Economics and Institutions of Innovation 237, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  4. Saha, Shrabani & Gounder, Rukmani & Su, Jen-Je, 2009. "The interaction effect of economic freedom and democracy on corruption: A panel cross-country analysis," Economics Letters, Elsevier, vol. 105(2), pages 173-176, November.
  5. Damien Bazin & Marko Danon, 2009. "Influence of the Corruption on the FDI Level, Case of Serbia," Book Chapters, Institute of Economic Sciences.
  6. Berdiev, Aziz N. & Kim, Yoonbai & Chang, Chun-Ping, 2013. "Remittances and corruption," Economics Letters, Elsevier, vol. 118(1), pages 182-185.
  7. Alexander Libman, 2006. "Government-Business Relations and Catching Up Reforms in the CIS," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 3(2), pages 263-288, December.
  8. Ali, Fathi & Fiess, Norbert & MacDonald, Ronald, 2009. "Climbing to the top? Foreign Direct Investment and Property Rights," SIRE Discussion Papers 2009-03, Scottish Institute for Research in Economics (SIRE).
  9. Markus Alzer & Ramin Dadasov, 2012. "Financial Liberalization and Institutional Development," MAGKS Papers on Economics 201219, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  10. Paulo Júlio & Ricardo Pinheiro-Alves & José Tavares, 2013. "Foreign direct investment and institutional reform: evidence and an application to Portugal," Working Papers w201306, Banco de Portugal, Economics and Research Department.
  11. dumludag, devrim, 2009. "Political Institutions and Foreign Direct Investment Flows into Developing Countries," MPRA Paper 27327, University Library of Munich, Germany, revised 02 Feb 2010.
  12. Gueorguiev, Dimitar & Malesky, Edmund, 2012. "Foreign investment and bribery: A firm-level analysis of corruption in Vietnam," Journal of Asian Economics, Elsevier, vol. 23(2), pages 111-129.
  13. Dang, Duc Anh, 2013. "How foreign direct investment promote institutional quality: Evidence from Vietnam," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1054-1072.
  14. John Ahlquist & Aseem Prakash, 2010. "FDI and the costs of contract enforcement in developing countries," Policy Sciences, Springer, vol. 43(2), pages 181-200, June.

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