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Economic growth, foreign direct investment and corruption in developed and developing countries

Author

Listed:
  • Marie Freckleton
  • Allan Wright
  • Roland Craigwell

Abstract

Purpose - The purpose of this paper is to examine the relationship between economic growth, foreign direct investment (FDI) and corruption. Design/methodology/approach - Data for 42 developing countries and 28 developed countries is analyzed using panel dynamic ordinary least squares. Findings - FDI has a significant influence on economic growth in both the short run and the long run for developing and developed countries. In the cases of the developing economies, lower levels of corruption enhance the impact that FDI has on economic growth. Originality/value - The study links corruption to the impact of FDI on economic growth.

Suggested Citation

  • Marie Freckleton & Allan Wright & Roland Craigwell, 2012. "Economic growth, foreign direct investment and corruption in developed and developing countries," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 39(6), pages 639-652, October.
    • Handle: RePEc:eme:jespps:v:39:y:2012:i:6:p:639-652
    DOI: 10.1108/01443581211274593
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    Citations

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    Cited by:

    1. Yahyaoui, Ismahen, 2021. "How corruption mitigates the effect of FDI on economic growth?," MPRA Paper 111190, University Library of Munich, Germany.
    2. Atanda Oyerinde Adewale, 2019. "Industrial Sector Growth, Macroeconomic Performance, and Corruption in the Sub Sahara Africa," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 64(2), pages 72-83, August.
    3. Ștefan Cristian Gherghina & Liliana Nicoleta Simionescu & Oana Simona Hudea, 2019. "Exploring Foreign Direct Investment–Economic Growth Nexus—Empirical Evidence from Central and Eastern European Countries," Sustainability, MDPI, vol. 11(19), pages 1-33, September.
    4. Olga Golubeva, 2017. "Does Perception of Business Climate Differ Between Foreign and Local Investors. A Firm-level Study of Transition Economies in Eastern Europe and Central Asia," Applied Economics and Finance, Redfame publishing, vol. 4(2), pages 113-128, March.
    5. Ismahene Yahyaoui, 2024. "How Corruption Mitigates the Effect of FDI on Economic Growth?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 1344-1362, March.
    6. Helmi Hamdi & Abdelaziz Hakimi, 2023. "Corruption, imported innovation, and growth: Evidence using the panel smooth transition regression approach for developing countries," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(5), pages 956-972, June.
    7. Kwakwa, Paul Adjei, 2015. "An investigation into the determinants of hydropower generation in Ghana," MPRA Paper 68033, University Library of Munich, Germany.
    8. Thangamani Bhavan, 2020. "Is Corruption ‘Grease’ Or ‘Sand’ in the Wheels of Foreign Direct Investment Inflows in the South Asian Economies?," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(3), pages 185-193, September.
    9. Golubeva, Olga, 2020. "Maximising international returns: Impact of IFRS on foreign direct investments," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(2).
    10. Enoch Kwaw-Nimeson & Ze Tian, 2023. "Institutional Quality, Foreign Direct Investment, and Regional Integration: Empirical Evidence From CEN-SAD," SAGE Open, , vol. 13(1), pages 21582440221, January.
    11. Sven Fischer, 2021. "Post-Disaster Spillovers: Evidence from Iranian Provinces," JRFM, MDPI, vol. 14(5), pages 1-26, April.
    12. Mohammad Enamul Hoque & Noor Azuddin Yakob, 2017. "Revisiting stock market development and economic growth nexus: The moderating role of foreign capital inflows and exchange rates," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1329975-132, January.
    13. Ali T. Akarca & Aysit Tansel, 2016. "Voter reaction to government incompetence and corruption related to the 1999 earthquakes in Turkey," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 43(2), pages 309-335, May.
    14. Marwa BenGhoul, 2019. "Political Risk and Foreign Direct Investment in Tunisia: The Case of the Services Sector 2004-2016," International Journal of Sustainable Economies Management (IJSEM), IGI Global, vol. 8(3), pages 48-60, July.
    15. Omar Al Farooque & Ali Hamid & Lan Sun, 2022. "National Governance Index, Corruption Index and Growth Rate—International Evidence from Sub-Saharan and MENA Countries," JRFM, MDPI, vol. 15(6), pages 1-19, June.
    16. Di Guardo, Maria Chiara & Marrocu, Emanuela & Paci, Raffaele, 2016. "The effect of local corruption on ownership strategy in cross-border mergers and acquisitions," Journal of Business Research, Elsevier, vol. 69(10), pages 4225-4241.
    17. Tahir, Muhammad & Ibrahim, Haslindar & Zulkafli, Abdul Hadi & Mushtaq, Muhammad, 2020. "Corruption, national culture, law and dividend repatriation policy," Journal of Multinational Financial Management, Elsevier, vol. 57.
    18. Ting Liu & Ye Huang, 2024. "The influence of subnational corruption on the conversion of foreign proprietorship: Stumbling block or lubricant? Evidence from Sino-foreign joint ventures," Asia Pacific Journal of Management, Springer, vol. 41(1), pages 135-170, March.
    19. Abdul Jalil & Amina Qureshi & Mete Feridun, 2016. "Is Corruption Good or Bad for FDI? Empirical Evidence from Asia, Africa and Latin America," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(3), pages 259-271, June.
    20. Sargis Karavardanyan, 2022. "Short-Term Harm, Long-Term Prosperity? Democracy, Corruption and Foreign Direct Investments in Sino-African Economic Relations," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(3), pages 417-486, September.
    21. Mounir Belloumi & Atef Saad Alshehry, 2021. "The Causal Relationships Between Corruption, Investments and Economic Growth in GCC Countries," SAGE Open, , vol. 11(4), pages 21582440211, October.
    22. Selçuk Çağrı ESENER & Evren İPEK, 2018. "The Impacts of Public Expenditure, Government Stability and Corruption on Per Capita Growth: An Empirical Investigation on Developing Countries," Sosyoekonomi Journal, Sosyoekonomi Society, issue 26(36).
    23. Yanfeng Liu & Xue Li & Xiaonan Zhu & Min-Kyu Lee & Po-Lin Lai, 2023. "The theoretical systems of OFDI location determinants in global north and global south economies," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.

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