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Corruption and its Influence on Economy with Focus on Inflow of Foreign Direct Investment

Author

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  • Petr Prochazka
  • Mansoor Maitah
  • Ales Pachmann

Abstract

This paper evaluates theimpactof corruption oneconomic sphere, with special emphasis oninward foreign direct investment(FDI), as investment is oneof the main factorsof economic performance. The impact ofcorruptiononFDI inflowsisstudiedglobally.Based on the researchof contemporary literature, it was found that thelevel of corruptionhasnot clear negativeimpact onFDI, what is leadingto the formulationof the researchobjectives of this work.The results confirmthe88 countriesfor the years2000, 2005and 2011, the existence of anegative relationship betweenthe level of corruptionandFDI inflows, this is a statisticallysignificant relationshipand it isthis relationship furtherquantifiedwithin theregression model.In conclusion, it is proposed to include additionalexplanatoryvariablesin addition tothe degree of corruptionto understanding the causesFDI inflows.

Suggested Citation

  • Petr Prochazka & Mansoor Maitah & Ales Pachmann, 2015. "Corruption and its Influence on Economy with Focus on Inflow of Foreign Direct Investment," Modern Applied Science, Canadian Center of Science and Education, vol. 9(12), pages 213-213, November.
    • Handle: RePEc:ibn:masjnl:v:9:y:2015:i:12:p:213
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    References listed on IDEAS

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    1. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
    2. Elizabeth Asiedu, 2006. "Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability," The World Economy, Wiley Blackwell, vol. 29(1), pages 63-77, January.
    3. Schneider, Friedrich G. & Buehn, Andreas, 2009. "Shadow economies and corruption all over the world: revised estimates for 120 countries," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 1, pages 1-53.
    4. Rajib Sanyal & Subarna Samanta, 2008. "Effect of perception of corruption on outward US Foreign Direct Investment," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 10(1), pages 123-140.
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    Cited by:

    1. Mohammad I. Elian & Nabeel Sawalha & Ahmed Bani-Mustafa, 2020. "Revisiting the FDI–Growth Nexus: ARDL Bound Test for BRICS Standalone Economies," Modern Applied Science, Canadian Center of Science and Education, vol. 14(6), pages 1-1, June.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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