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Institutions and Local Supplier Quality

Author

Listed:
  • Hasan Faruq

    (Xavier University)

  • Michael Webb

    (Xavier University)

  • David T Yi

    (Xavier University)

Abstract

A large literature has examined the relationship between institutional dimensions (such as property rights, corruption, etc.) and foreign direct investment (FDI). An emerging literature also explores the relationship between local supplier quality and FDI. We contribute to this literature by empirically examining, for the first time, the relationship between social and political institutions and local supplier quality. Our main findings are that: (a) weak property rights and low bureaucratic quality degrade the development of an effective supply chain, and (b) the effect of corruption may depend on whether corruption is ‘centralized' or ‘decentralized'. These results concerning local supplier quality may have important implications for FDI as well as overall economic development.

Suggested Citation

  • Hasan Faruq & Michael Webb & David T Yi, 2016. "Institutions and Local Supplier Quality," Economics Bulletin, AccessEcon, vol. 36(4), pages 2291-2297.
    • Handle: RePEc:ebl:ecbull:eb-16-00655
    as

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    References listed on IDEAS

    as
    1. Fathi Ali & Norbert Fiess & Ronald MacDonald, 2010. "Do Institutions Matter for Foreign Direct Investment?," Open Economies Review, Springer, vol. 21(2), pages 201-219, April.
    2. Aymo Brunetti & Beatrice Weder, 1998. "Investment and institutional uncertainty: A comparative study of different uncertainty measures," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(3), pages 513-533, September.
    3. Giroud, Axèle & Jindra, Björn & Marek, Philipp, 2012. "Heterogeneous FDI in Transition Economies – A Novel Approach to Assess the Developmental Impact of Backward Linkages," World Development, Elsevier, vol. 40(11), pages 2206-2220.
    4. Kwabena Gyimah-Brempong, 2002. "Corruption, economic growth, and income inequality in Africa," Economics of Governance, Springer, vol. 3(3), pages 183-209, November.
    5. Bliss, Christopher & Di Tella, Rafael, 1997. "Does Competition Kill Corruption?," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 1001-1023, October.
    6. Josef C. Brada & Zdenek Drabek & M. Fabricio Perez, 2012. "The Effect of Home-country and Host-country Corruption on Foreign Direct Investment," Review of Development Economics, Wiley Blackwell, vol. 16(4), pages 640-663, November.
    7. Javorcik, Beata S. & Wei, Shang-Jin, 2009. "Corruption and cross-border investment in emerging markets: Firm-level evidence," Journal of International Money and Finance, Elsevier, vol. 28(4), pages 605-624, June.
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    Cited by:

    1. Mohamed El Abdellaoui & Gilles Pache, 2019. "Effects of disruptive events within the supply chain on perceived logistics performance," Economics Bulletin, AccessEcon, vol. 39(1), pages 41-54.

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    More about this item

    Keywords

    Institutions; Property Rights; Corruption; Bureaucracy; Supply Chain;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • F0 - International Economics - - General

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