Corruption's Effect on Foreign Direct Investment

2014 ◽  
pp. 850-865 ◽  
Author(s):  
Elvira Pupović
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Cross Sectional ◽  
New Model ◽  
Transparency International ◽  
International Report ◽  
New Perspective ◽  
Using Data ◽  
Investment Growth ◽  
The Impact

This study introduces a new perspective on the role of corruption in investment growth and provides quantitative estimates of the impact of corruption on the investment inflows. Motivated by these issues, the main objective of this article is to empirically reexamine the effects of corruption on foreign direct investment (FDI) inflows in Bosnia and Herzegovina, by incorporating a further link between corruption and investment inflows as new understanding investment concepts. Using data from Transparency International report, World Bank and National Banking Statistical data, it is manifested in a cross sectional setting that corruption has a negative and significant impact on the foreign direct investment inflows. The new model of eliminated unexpected risk involved managing corruption's effect on investments. One has to immediately consider the linkage between corruption and investment inflows and to learn how to manage this phenomenon like old risk of a new model.

Corruption's Effect on Foreign Direct Investment

2013 ◽  
Vol 2 (3) ◽  
pp. 1-18 ◽  
Author(s):  
Elvira Pupović
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Cross Sectional ◽  
New Model ◽  
Transparency International ◽  
International Report ◽  
New Perspective ◽  
Using Data ◽  
Investment Growth ◽  
The Impact

This study introduces a new perspective on the role of corruption in investment growth and provides quantitative estimates of the impact of corruption on the investment inflows. Motivated by these issues, the main objective of this article is to empirically reexamine the effects of corruption on foreign direct investment (FDI) inflows in Bosnia and Herzegovina, by incorporating a further link between corruption and investment inflows as new understanding investment concepts. Using data from Transparency International report, World Bank and National Banking Statistical data, it is manifested in a cross sectional setting that corruption has a negative and significant impact on the foreign direct investment inflows. The new model of eliminated unexpected risk involved managing corruption's effect on investments. One has to immediately consider the linkage between corruption and investment inflows and to learn how to manage this phenomenon like old risk of a new model.

scholarly journals ASSESSMENT OF CORRUPTION EFFECT ON FOREIGN INVESTMENT FLOWS

2011 ◽  
Vol 1 (3) ◽  
pp. 229
Author(s):  
Māris Sprinģis
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Single Point ◽  
Transparency International ◽  
Assessment Period ◽  
Corruption Index ◽  
Development Data ◽  
Per Capita ◽  
Using Data ◽  
The Impact

The purpose of the present paper is to investigate the impact of corruption on foreign direct investment (FDI) flows. Using data from the International Monetary Fund, Transparency International and United Nations conference about commerce and development data bases a cross-section econometric model was estimated to evaluate in which way and how strong corruption influence FDI inflows. Econometric modelling covers the period from year 2000 to 2007 and the data about 82 world countries that constitute more than 500 records. The main conclusion of the paper is that corruption has a negative and significant impact on the foreign direct investment inflows. Thus, changes in the level of corruption in the country, which is reflected as a decrease (increase) of the corruption index by one solitary, on average, cause an increase (decrease) in FDI inflow by 96,064 dollars per capita. Moreover, every single point of the corruption index in the previous assessment period, on the average ensures 123,077 dollars inflow of FDI per capita.

Does transnational terrorism reduce foreign direct investment? Business-related versus non-business-related terrorism

2012 ◽  
Vol 49 (3) ◽  
pp. 407-422 ◽  
Author(s):  
Matthew Powers ◽  
Seung-Whan Choi
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
International Terrorism ◽  
Series Data ◽  
Transnational Terrorism ◽  
Cross Sectional ◽  
Using Data ◽  
Multinational Businesses ◽  
The Impact

Although several existing studies examine the economic impact of transnational terrorism by referring to its potential to reduce foreign direct investment (FDI), they overlook possible differences in the effects of business-related and non-business-related terrorism. We argue that the former type of terror negatively affects FDI since it damages multinationals’ buildings, destroys their products, kills their employees, and causes a rise in insurance premiums. The latter type of terror, however, does not induce the same ramifications and should thus have little or less influence on a country’s FDI. In order to examine the effects of these two different types of transnational terrorism, we employ three different statistical techniques using data gleaned from the International Terrorism: Attributes of Terrorist Events (ITERATE) dataset. A cross-sectional, time-series data analysis of 123 developing countries during the period from 1980 to 2008 reveals that transnational terrorism that harms multinational businesses contributes to a decrease of foreign investment but transnational terrorism that afflicts non-business-related targets is statistically irrelevant. This implies that when countries implement counterterrorism measures that are directly intended to mitigate the impact of business-related terrorist activities, they are likely to attract more foreign capital and should therefore realize a greater degree of economic development.

COMPLEMENTARITY OF FDI AND EMPLOYMENT GENERATION IN THE AGRICULTURE SECTOR OF GHANA: ANALYSIS OF RECENT DEVELOPMENTS

2020 ◽  
Vol 11 (1) ◽  
pp. 47-60
Author(s):  
Evans Yeboah
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
High Rate ◽  
Agriculture Sector ◽  
Investment Promotion ◽  
Recent Developments ◽  
Employment Generation ◽  
Using Data ◽  
Agriculture Products ◽  
The Impact

Foreign direct investment inflows into Ghana have been a major source of economic growth transformation. Many investing countries aspire to provide Ghana’s economy with new models and direction for development alternatives to foreign aid which will in effect benefit both nations. Given the government’s intention of transforming most agriculture products into finished commodities other than exporting these commodi-ties in their raw states, a new set of incentives and policies to attract investors into the agriculture sector have been initiated. This consists of farming for food provision and employment generation in a bid to moderating the high rate of unemployment aside depending on the normal farming methods. This study sets to investigate the impact of foreign direct investment in the agriculture sector on employment generation. The paper argues that employment created in the agriculture sector was attained through the number of registered projects allocated to various sectors within the Ghanaian economy categorized by the Ghana Investment Promotion Centre. Methodologically, this study utilizes a statistical descriptive approach that backs a summary of the com-plementary analysis of foreign direct investment inflow quantitatively using data on FDI inflows from 2013 to 2018. The result shows that the percentage share of the total number of registered projects allocated and employment created in the agriculture sector through FDI is very low compared to sectors like the manufacturing and service. It was also discovered that the agriculture sector contribution to the Gross Domestic Product (GDP) in the late 90s weighed much higher than the other sectors and contin-uous decline in the 2000s. It is recommended that investors should enter into the agri-culture sector since there are many benefits.

scholarly journals FOREIGN DIRECT INVESTMENT IMPACT ON MARKET CONCENTRATION IN THE MANUFACTURING SECTOR OF BOSNIA AND HERZEGOVINA

2018 ◽  
pp. 135 ◽  
Author(s):  
Radovan Kastratović
Keyword(s):  
Foreign Direct Investment ◽  
Bosnia And Herzegovina ◽  
Direct Investment ◽  
Manufacturing Sector ◽  
Least Square Method ◽  
Market Concentration ◽  
Least Square ◽  
Cross Sectional ◽  
Financial Reports ◽  
The Impact

There is no consensus regarding the effect of foreign direct investment on market concentration in the literature of foreign direct investment and the theory of industrial organization. The aim of the research is to empirically investigate this impact in the context of the manufacturing sector of Bosnia and Herzegovina. To achieve this aim we estimate the econometric model by applying ordinary least square method. The sample of 21 industries comprising manufacturing sector of Bosnia and Herzegovina was used for model estimation. Cross-sectional sample data was obtained from the Central Bank of Bosnia and Herzegovina and the financial reports of 4924 companies registered in the aforementioned industries for the year 2016. The results suggest that the impact of foreign direct investment on market concentration can best be described with a convex function.

Impact of Corporate Fraud on Foreign Direct Investment?

2021 ◽  
pp. 148-165
Author(s):  
Radwan Alkebsee ◽  
Gaoliang Tian ◽  
Konstantinos G. Spinthiropoulos ◽  
Eirini Stavropoulou ◽  
Anastasios Konstantinidis
Keyword(s):  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Capital Market ◽  
Direct Investment ◽  
Corporate Fraud ◽  
Foreign Investors ◽  
Negatively Associated ◽  
Listed Firms ◽  
Using Data ◽  
The Impact

The capital market reputation attracts foreign investment. Corporate fraud phenomenon is one of the most crucial aspects that threaten foreign investors. This study investigates the impact of corporate fraud on foreign direct investment FDI. Using data of Chinese listed firms, over the period 2009 to 2017, the results show that corporate fraud is negatively associated with foreign direct investment. This suggests that corporate fraud declines foreign shareholders ratio, and foreign investors avoid investing in a risky environment where their wealth may be expropriated. Further, we explore the impact of having foreign shareholders on corporate fraud. We find that increasing foreign shareholders may help in curbing corporate fraud due to diversified corporate experience and risk-taking behavior. However, the findings remain robust after controlling for the potential endogeneity problem. Our findings have important implications for policymakers and governments as it shows that corporate fraud is a crucial determinant to the cause of foreign direct investment.

scholarly journals The Influence of Political and Social Globalisation on Foreign Direct Investment Inflow in Developing Countries: The Role of Financial Development as a Moderating Factor

2021 ◽  
Vol 16 (1) ◽  
pp. 297-322
Author(s):  
Marhamah Mohd Rafidi ◽  
◽  
Jamaliah Said ◽  
Naila Erum ◽  
Farha Abdol Ghapar ◽  
...  
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Cross Sectional ◽  
Middle Income ◽  
Middle Income Countries ◽  
Cross Sectional Dependence ◽  
The Impact

This study presents the effect of political and social globalisation on Foreign Direct Investment (FDI) inflow in developing countries. The eminence of decomposed globalisation element in the FDI area is argued here. New insights into empirical evidence are offered by dropping economic globalisation as one of the decomposed components. A panel data of 42 developing countries from 1984 until 2016 was used by applying the CSARDL approach. The study is also on the impact of political and social globalisation in developing countries by splitting them into two income stratification: Upper Middle-income Countries and Lower Middle-Income Countries by incorporating financial development as a moderating variable. It documents that political globalisation postulates a U-shaped relationship after addressing the Cross-Sectional Dependence (CD) problem, while social globalisation reverses the U-shaped relationship. It was found that political globalisation and social globalisation are conditional to the level of income rather than the overall developing countries’ stream. Besides, the prominent role of financial development in promoting FDI inflow, especially to income level, was observed. We suggest that developing countries should increase the capacity to absorb political and social globalisation in promoting FDI. Keywords: FDI inflow, globalisation, political globalisation, social globalisation, financial development, CS-ARDL

scholarly journals Covid-19 Pandemic and Outward Foreign Direct Investment: A Preliminary Note

ECONOMICS ◽  
2020 ◽  
Vol 8 (2) ◽  
pp. 79-88
Author(s):  
Folorunsho M. Ajide ◽  
Tolulope T. Osinubi
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Positive Impact ◽  
International Investment ◽  
Preliminary Evidence ◽  
Business Environment ◽  
Least Square ◽  
Preliminary Note ◽  
Cross Sectional ◽  
The Impact

AbstractSocial-distance policy of most governments and the pandemic impact of corona virus (COVID-19) on human health are expected to shutter international investment and business environment. However, there is little or no study to show the early empirical evidence on this relationship, most especially its impacts on FDI flows in the economies. This note provides a preliminary evidence of the impact of COVID-19 on FDI outflows. Our data cover cross-sectional first quarter, average data; between 1 January – 31 March, 2020 from 43 countries. Using Ordinary least square (OLS) and Quantile regressions, we document that there is a positive relationship between COVID-19 confirmed cases and FDI outflows. In addition, there is a positive impact of COVID-19 related confirmed deaths on FDI outflows across all quartiles estimations. This means that COVID-19 pandemic fuels the foreign direct investment outflows. The major causes could be the reduction in the ability of firms to invest due to a shortage in the number of skilled employees because they care for their health safety, a decline in corporate profits and increase in cost of finance. In addition, the propensities to invest have been widely affected negatively in most economies. These factors also become obvious when most economies experience a very high level of risk perception in financial market.

scholarly journals The Impact of Foreign Direct Investment on the Economic Growth of South Caucasus Countries

2021 ◽  
Vol 17 (35) ◽  
pp. 38
Author(s):  
Lela Scholer-Iordanashvil
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Trade Openness ◽  
Ordinary Least Squares ◽  
South Caucasus ◽  
Gdp Growth Rate ◽  
Using Data ◽  
Classical Linear Regression ◽  
The Impact

This paper focuses on the effects of foreign direct investment inflows on the economic growth in a panel of three South Caucasus countries using data from 1996-2019 periods. In this study, we applied the following control variables; trade openness, investment, real exchange rate, and population growth. Classical linear regression model was employed in this paper. Ordinary least squares methods are used for estimation. Empirical results revealed that there is no significant effect of FDI inflows on economic growth. The results show that inward FDI stock-to-GDP ratio and real GDP growth rate are positively correlated.

Contingent Credibility: The Impact of Investment Treaty Violations on Foreign Direct Investment

2011 ◽  
Vol 65 (3) ◽  
pp. 401-432 ◽  
Author(s):  
Todd Allee ◽  
Clint Peinhardt
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Cross Sectional ◽  
Fdi Inflows ◽  
The Past ◽  
Investment Treaty ◽  
The World Bank ◽  
Time Series Analyses ◽  
The Impact ◽  
Bit Commitments

AbstractDuring the past few decades governments have signed nearly 2,700 bilateral investment treaties (BITs) with one another in an attempt to attract greater levels of foreign direct investment (FDI). By signing BITs, which contain strong enforcement provisions, investment-seeking governments are thought to more credibly commit to protecting whatever FDI they receive, which in turn should lead to increased confidence among investors and ultimately greater FDI inflows. Our unique argument is that the ability of BITs to increase FDI is contingent on the subsequent good behavior of the governments who sign them. BITs should increase FDI only if governments actually follow through on their BIT commitments; that is, if they comply with the treaties. BITs allow investors to pursue alleged treaty violations through arbitration venues like the International Centre for the Settlement of Investment Disputes (ICSID), a heavily utilized and widely observed arbitral institution that is part of the World Bank. Being taken before ICSID, then, conveys negative information about a host country's behavior to the broader investment community, which could result in a sizeable loss of future FDI into that country. We test these contingent effects of BITs using cross-sectional, time-series analyses on all non-OECD countries during a period spanning 1984–2007. We find that BITs do increase FDI into countries that sign them, but only if those countries are not subsequently challenged before ICSID. On the other hand, governments suffer notable losses of FDI when they are taken before ICSID and suffer even greater losses when they lose an ICSID dispute.

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