IDEAS home Printed from https://ideas.repec.org/a/mes/emfitr/v52y2016i2p400-419.html
   My bibliography  Save this article

Corruption Distance and Foreign Direct Investment

Author

Listed:
  • Xingwang Qian
  • Jesus Sandoval-Hernandez

Abstract

We study the effects of “corruption distance,” defined as the difference in corruption levels between country pairs on bilateral foreign direct investment (FDI). Using a “gravity” model and the Heckman (1979) two-stage framework on a data set of forty-five countries from 1997 to 2007, we find that corruption distance adversely influences both the likelihood of FDI and the volume of FDI. A novel finding in this study is that we identify the asymmetric effect of corruption distance and find that the positive corruption distance, defined as the corruption distance from a high corruption source to a low corruption host country, is the prominent one that affects the behavior of bilateral FDI.

Suggested Citation

  • Xingwang Qian & Jesus Sandoval-Hernandez, 2016. "Corruption Distance and Foreign Direct Investment," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(2), pages 400-419, February.
    • Handle: RePEc:mes:emfitr:v:52:y:2016:i:2:p:400-419
    DOI: 10.1080/1540496X.2015.1047301
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1540496X.2015.1047301
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1540496X.2015.1047301?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Law, Siong Hook & Kutan, Ali M. & Naseem, N.A.M., 2018. "The role of institutions in finance curse: Evidence from international data," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 174-191.
    2. Zongo, Amara, 2020. "The Impact of Restrictive Measures on Bilateral FDI in OECD Countries," MPRA Paper 101929, University Library of Munich, Germany.
    3. Tobias Zander, 2020. "Does corruption matter for FDI flows in the OECD? A gravity analysis," EIIW Discussion paper disbei280, Universitätsbibliothek Wuppertal, University Library.
    4. Luisa Alamá-Sabater & Teresa Fernández-Núñez & Miguel Ángel Márquez & Javier Salinas-Jimenez, 2020. "Do Countries with Similar Levels of Corruption Compete to Attract Foreign Investment? Evidence Using World Panel Data," Sustainability, MDPI, vol. 12(15), pages 1-15, July.
    5. Sangyup Choi & Davide Furceri & Chansik Yoon, 2021. "Policy uncertainty and foreign direct investment," Review of International Economics, Wiley Blackwell, vol. 29(2), pages 195-227, May.
    6. Tobias Zander, 2021. "Does corruption matter for FDI flows in the OECD? A gravity analysis," International Economics and Economic Policy, Springer, vol. 18(2), pages 347-377, May.
    7. Romero-Martínez, Ana M. & García-Muiña, Fernando E., 2021. "Digitalization level, corruptive practices, and location choice in the hotel industry," Journal of Business Research, Elsevier, vol. 136(C), pages 176-185.
    8. Lee, Jeoung Yul & Jiménez, Alfredo & Choi, Seong-jin & Choi, Yun Hyeong, 2022. "Ideological polarization and corporate lobbying activity: The contingent impact of corruption distance," Journal of Business Research, Elsevier, vol. 141(C), pages 448-461.
    9. Cooke, Fang Lee & Wang, Jingtian & Wood, Geoffrey, 2022. "A vulnerable victim or a tacit participant? Extending the field of multinationals and corruption research," International Business Review, Elsevier, vol. 31(1).
    10. Yerrabati, Sridevi & Hawkes, Denise Donna, 2016. "Institutions and Investment in the South and East Asia and Pacific Region: Evidence from Meta-Analysis," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 10, pages 1-48.
    11. Libman, Alexander & Stone, Randall W. & Vinokurov, Evgeny, 2022. "Russian power and the state-owned enterprise," European Journal of Political Economy, Elsevier, vol. 73(C).
    12. Vissa, Siva Kameswari & Thenmozhi, M., 2022. "Do home country stability factors matter for domestic and cross border mergers and acquisitions? A case of G19 countries," Finance Research Letters, Elsevier, vol. 47(PA).
    13. Lili Pan & Lin Wang & Qianqian Feng, 2022. "Effects of Host-Country Corruption on China’s Outward Foreign Direct Investments: Expert Knowledge Versus Public Awareness," SAGE Open, , vol. 12(4), pages 21582440221, December.
    14. Vanessa da Silva Mariotto Onody & Ana Catarina Gandra de Carvalho & Eduardo Polloni-Silva & Guilherme Augusto Roiz & Enzo Barberio Mariano & Daisy Aparecida Nascimento Rebelatto & Herick Fernando Mora, 2022. "Corruption and FDI in Brazil: Contesting the “Sand” or “Grease” Hypotheses," Sustainability, MDPI, vol. 14(10), pages 1-18, May.
    15. Andris Zimelis, 2020. "Corruption research: A need for an integrated approach," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 23(3), pages 288-306, September.
    16. Nor Balkish Zakaria & Muhammad Farhan Nordin & Rahimah Mohamed Yunos & Jamaliah Said, 2019. "The Integrity of Local Enforcement Officers: Self Proclaim vs Colleague Perception," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 288-300, August.
    17. Kouznetsov, Alex & Kim, Sarah & Wright, Chris, 2019. "An audit of received international business corruption literature for logic, consistency, completeness of coverage," Journal of International Management, Elsevier, vol. 25(4).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:emfitr:v:52:y:2016:i:2:p:400-419. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MREE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.