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Does corruption limit FDI and economic growth? Evidence from MENA countries

Author

Listed:
  • Abdelaziz Hakimi

    (UJ - Université de Jendouba)

  • Helmi Hamdi

    (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon)

Abstract

Purpose - The purpose of this paper is to analyze the effects of corruption on investment and growth in 15 Middle East and North African (MENA) countries during the period 1985-2013. The authors used the International Country Risk Guide (ICRG) corruption index and conducted a panel cointegration analysis and Granger causality procedure to detect the dynamic relationships between the variables. Results indicate that corruption is a serious hurdle to economic growth in MENA countries since it affects investment activities and foreign direct investment inflows. In this case, policymakers have to implement effective anti-corruption strategies to avoid the epidemic of corruption. Design/methodology/approach - The authors used the ICRG corruption index and conducted a panel cointegration analysis and Granger causality procedure to detect the dynamic relationships between the variables. Findings - The main findings of this paper show that corruption is a serious hurdle to economic growth in MENA countries since it affects investment activities and foreign direct investment inflows. In this case, policymakers have to implement effective anti-corruption strategies to avoid the epidemic of corruption. Research limitations/implications - Unfortunately, in this study the authors did not use institutional variables to see their role and to judge whether governments should enhance the quality of institution and improve the corporate governance. This would be an opportunity to expand the sample and to conduct a new research in the near future to assess the real costs of corruption in the MENA region. Practical implications - Governments and policymakers need to apprehend and admit that corruption is an important issue that deters foreign direct investment and threats the economic development and growth. Corruption can also deteriorate the infrastructure and increase the cost of doing business for both government and private sector which in turn will lower the growth (Tanzi and Doo
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Abdelaziz Hakimi & Helmi Hamdi, 2017. "Does corruption limit FDI and economic growth? Evidence from MENA countries," Post-Print hal-01794391, HAL.
    • Handle: RePEc:hal:journl:hal-01794391
    DOI: 10.1108/IJoEM-06-2015-0118
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