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Digging in the dirt? Extractive industry FDI and corruption

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  • Ivar Kolstad

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  • Arne Wiig

    ()

Abstract

Does corruption attract or deter foreign investment in the extractive sectors? This article presents an econometric analysis of extractive industry foreign direct investment (FDI) inflows to 81 countries in the period 1996–2009. The results suggest that increased corruption within a country is associated with increased extractive industry FDI, but at a diminishing rate as corruption increases grow larger. For realistic changes in corruption, however, more corruption is associated with more extractive industry investment. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • Ivar Kolstad & Arne Wiig, 2013. "Digging in the dirt? Extractive industry FDI and corruption," Economics of Governance, Springer, vol. 14(4), pages 369-383, November.
  • Handle: RePEc:spr:ecogov:v:14:y:2013:i:4:p:369-383
    DOI: 10.1007/s10101-013-0133-2
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    References listed on IDEAS

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    7. Peter J. Buckley, 2008. "Do we need a special theory of foreign direct investment for extractive industries?," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, vol. 1(2), pages 93-104, June.
    8. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
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    Citations

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    Cited by:

    1. Leonce Ndikumana & Mare Sarr, 2016. "Capital Flight and Foreign Direct Investment in Africa: An Investigation of the Role of Natural Resource Endowment," SALDRU Working Papers 167, Southern Africa Labour and Development Research Unit, University of Cape Town.
    2. Léonce Ndikumana & Mare Sarr, 2016. "Capital flight and foreign direct investment in Africa An investigation of the role of natural resource endowment," WIDER Working Paper Series 058, World Institute for Development Economic Research (UNU-WIDER).
    3. Trabelsi, Mohamed Ali & Trabelsi, Hédi, 2014. "At what level of corruption does economic growth decrease?," MPRA Paper 81279, University Library of Munich, Germany.

    More about this item

    Keywords

    Corruption; Governance; Mining; Quarrying; Petroleum; Extractive industries; B23; D73; N50;

    JEL classification:

    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative

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