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The Effects of Corruption on Foreign Investments in Developed and Developing Countries

Author

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  • Romerito da Silva Oliveira

    (Fucape Business School, Brazil)

  • Arilda Teixeira

    (Fucape Business School, Brazil)

Abstract

This paper aimed to identify which elements related to the corruption impact the Foreign Direct Investment (FDI) regarding developed and developing countries. In order to achieve this purpose, the member countries of the Economic Commission for Latin America and the Caribbean (ECLAC) and the Organisation for Economic Co-operation and Development (OECD) were analysed. It was a quantitative and descriptive survey, with a sample of 78 countries and secondary data from 2012 to 2017. The results were estimated by Logistic Regression and Multiple Linear Regression, with Random Effects (RA), chosen by the Breusch-Pagan (1980) and Hausman (1978) tests. It was suggested that the corruption does not impact the inflow of FDI; however, being a developed country, with positive Gross Domestic Product (GDP) growth rates, and institutional quality, have positive impacts on the inflow of the FDI. Moreover, it showed that it is possible to accept, with 95% confidence, the following statement, the more developed a country is, the smaller its Capital inflow of FDI.

Suggested Citation

  • Romerito da Silva Oliveira & Arilda Teixeira, 2020. "The Effects of Corruption on Foreign Investments in Developed and Developing Countries," European Journal of Studies in Management and Business, EUROKD, vol. 16, pages 29-42.
    • Handle: RePEc:bco:mbrqaa::v:16:y:2020:p:29-42
    DOI: 10.32038/mbrq.2020.16.03
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