Deception, corruption and 'schizophrenia' in an incomplete-information model of foreign direct investment
AbstractNot all potential investors are equally discouraged by host country corruption. Some investors may actually benefit from it, especially if deception as to the true value of their investments is possible. A model is presented and tested with data for Latin America's top seven hosts and top eight sources of foreign direct investment. In general, FDI is not affected by host corruption, but sometimes it responds (mostly negatively) to the gap between the corruption indices of source and host and, to a lesser extent, to the gap in degrees of economic freedom. There is substantial heterogeneity among source countries.
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Bibliographic InfoPaper provided by University of Liverpool Management School in its series Research Papers with number 2001_01.
Date of creation: 2001
Date of revision:
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Postal: Management School University of Liverpool, Chatham Street, Liverpool, L69 7ZH, Great Britain
Phone: +44(0)151 795 3108
Fax: +44(0)151 795 3004
Web page: http://www.liv.ac.uk/management/
More information through EDIRC
Foreign direct investment (FDI); Corruption; Incomplete information; Country heterogeneity; Latin America;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L5 - Industrial Organization - - Regulation and Industrial Policy
- N46 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Latin America; Caribbean
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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