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Corruption and Foreign Direct Investment (FDI) in ASEAN-5: A Panel Evidence

Author

Listed:
  • Bakri Abdul Karim

    (Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS))

  • Zulkefly Abdul Karim

    (Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM))

  • Mohamad Naufal Nasharuddin

    (Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS))

Abstract

This paper examines the effects of corruption on the inflow of FDI in ASEAN-5 countries by controlling two macroeconomic variables namely Gross Domestic Product (GDP) and inflation. Using a static panel data estimation, the results show the significant relationship between corruption and Gross Domestic Product (GDP) on the inflow of FDI in ASEAN-5. This results indicate that less corrupted countries and larger market size would attract more FDI inflows. The policy implications from this study suggests that ASEAN-5 governments need to have concerted and continues efforts in improving the integrity and credibility of their administration and transactions. In addition, maintaining their sustainable of economic growth is also crucial as a full factor in attracting more FDI inflows in future.

Suggested Citation

  • Bakri Abdul Karim & Zulkefly Abdul Karim & Mohamad Naufal Nasharuddin, 2018. "Corruption and Foreign Direct Investment (FDI) in ASEAN-5: A Panel Evidence," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 64, pages 145-156, Desember.
    • Handle: RePEc:lpe:efijnl:201809
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