Foreign investment and bribery: A firm-level analysis of corruption in Vietnam
Among the concerns faced by countries pondering the costs and benefits of greater economic openness to international capital flows is the worry that new and powerful external actors will exert a corrupting influence on the domestic economy. In this paper, we use a novel empirical strategy, drawn from research in experimental psychology, to test the linkage between foreign direct investment (FDI) and corruption. The prevailing literature has produced confused and contradictory results on this vital relationship due to errors in their measurement of corruption which are correlated with FDI inflows. When a less biased operationalization is employed, we find clear evidence of corruption during both registration and procurement procedures in Vietnam. The prevalence of corruption, however, is not associated with inflows of FDI. On the contrary, one measure of economic openness appears to be the most important driver of reductions in Vietnamese corruption: the wave of domestic legislation, which accompanied the country's bilateral trade liberalization agreement with the United States (US-BTA), significantly reduced bribery during business registration.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Olken, Benjamin A., 2009.
"Corruption perceptions vs. corruption reality,"
Journal of Public Economics,
Elsevier, vol. 93(7-8), pages 950-964, August.
- Benjamin A. Olken, 2006. "Corruption Perceptions vs. Corruption Reality," NBER Working Papers 12428, National Bureau of Economic Research, Inc.
- Benjamin Olken, 2006. "Corruption perceptions vs. corruption reality," Natural Field Experiments 00318, The Field Experiments Website.
- Olken, Benjamin, 2007. "Corruption Perceptions vs. Corruption Reality," CEPR Discussion Papers 6272, C.E.P.R. Discussion Papers.
- Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
- Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
- V.N. Balasubramanyam, 2008. "Foreign Direct Investment," Chapters, in: International Handbook of Development Economics, Volumes 1 & 2, chapter 39 Edward Elgar Publishing.
- Kreps, David M, 1997. "Intrinsic Motivation and Extrinsic Incentives," American Economic Review, American Economic Association, vol. 87(2), pages 359-64, May.
- Parker, Steve & Phan, Vinh Quang & Nguyen, Ngoc Anh, 2005. "Has the U.S.-Vietnam Bilateral Trade Agreement Led to Higher FDI into Vietnam?," MPRA Paper 1384, University Library of Munich, Germany.
- Stephen Knack & Omar Azfar, 2003. "Trade intensity, country size and corruption," Economics of Governance, Springer, vol. 4(1), pages 1-18, 04.
- Bliss, Christopher & Di Tella, Rafael, 1997. "Does Competition Kill Corruption?," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 1001-23, October.
- Anh Ngoc Nguyen & Nguyen Thang & Le Dang Trung & Ngoc Quang Pham & Chuc Dinh Nguyen & Nhat Duc Nguyen, 2008.
"Foreign Direct Investment in Vietnam: Is There Any Evidence Of Technological Spillover Effects,"
18, Development and Policies Research Center (DEPOCEN), Vietnam.
- Nguyen, Anh Ngoc & Nguyen, Thang & Le, Dang Trung & Pham, Quang Ngoc & Nguyen, Dinh Chuc & Nguyen, Duc Nhat, 2008. "Foreign direct investment in Vietnam: Is there any evidence of technological spillover effects," MPRA Paper 7273, University Library of Munich, Germany.
- Gerring, John & Thacker, Strom C., 2005. "Do Neoliberal Policies Deter Political Corruption?," International Organization, Cambridge University Press, vol. 59(01), pages 233-254, January.
- Felipe Larraín & José Tavares, 2004. "Does Foreign Direct Investment Decrease Corruption?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 41(123), pages 217-230.
- Roberta Gatti, 2004. "Explaining corruption: are open countries less corrupt?," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(6), pages 851-861.
- Tam Bang Vu, 2008. "Foreign direct investment and endogenous growth in Vietnam," Applied Economics, Taylor & Francis Journals, vol. 40(9), pages 1165-1173.
- Elisabeth Coutts & Ben Jann, 2008. "Sensitive Questions in Online Surveys: Experimental Results for the Randomized Response Technique (RRT) and the Unmatched Count Technique (UCT)," ETH Zurich Sociology Working Papers 3, ETH Zurich, Chair of Sociology.
- Imai, Kosuke, 2011. "Multivariate Regression Analysis for the Item Count Technique," Journal of the American Statistical Association, American Statistical Association, vol. 106(494), pages 407-416.
- Elisabeth Coutts & Ben Jann, 2011. "Sensitive Questions in Online Surveys: Experimental Results for the Randomized Response Technique (RRT) and the Unmatched Count Technique (UCT)," Sociological Methods & Research, SAGE Publishing, vol. 40(1), pages 169-193, February.
- World Bank, 2010. "World Development Indicators 2010," World Bank Publications, The World Bank, number 4373, July.
- Chuck C Y Kwok & Solomon Tadesse, 2006. "The MNC as an agent of change for host-country institutions: FDI and corruption," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 767-785, November.
When requesting a correction, please mention this item's handle: RePEc:eee:asieco:v:23:y:2012:i:2:p:111-129. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.