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Foreign Ownership of Firms and Corruption in Africa

Author

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  • Anselm Komla Abots

    (Department of Economics, University of Education, P. O. Box 25, Winneba, Ghana,
    Graduate School of Development Economics, National Institute of Development Administration, Bangkapi, Thailand)

Abstract

The study finds the impact of the percentage of total annual sales of a firm paid as informal payments to public officials (bribes) on foreign ownership of firms in Africa while controlling for other variables outside the country of origin of investment. The study used secondary data from the World Business Environment Survey conducted by the World Bank. In all 3290 firms made up of the manufacturing, services and retail sectors are included in the analysis. The Tobit and probit estimation techniques were used. The results indicate that the percentage of total annual sales of the firm paid as informal payments to the public officials has a negative and highly significant impact on foreign ownership of firms in Africa. African leaders should therefore institute policies to control corruption in order to boost foreign investors’ confidence in their economies.

Suggested Citation

  • Anselm Komla Abots, 2015. "Foreign Ownership of Firms and Corruption in Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 5(3), pages 647-655.
  • Handle: RePEc:eco:journ1:2015-03-03
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Lamessa Tariku ABDISA, 2018. "Power Outages, its Economic Cost and Firm Performance: Evidence from Ethiopia," Departmental Working Papers 2018-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Anselm Komla Abotsi, 2016. "Power Outages and Production Efficiency of Firms in Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 6(1), pages 98-104.
    3. repec:eee:juipol:v:53:y:2018:i:c:p:111-120 is not listed on IDEAS
    4. Abdisa, Lamessa Tariku, 2018. "Power Outages, Its Economic Cost and Firm Performance: Evidence From Ethiopia," MPRA Paper 88217, University Library of Munich, Germany.

    More about this item

    Keywords

    Foreign Ownership of Firm; Informal Payments; Corruption; Institutions; Foreign Investors;

    JEL classification:

    • 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
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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