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Government regulation, corruption, and FDI

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  • Ram Mudambi
  • Pietro Navarra
  • Andrew Delios

Abstract

We analyze favors as utilization of informal modes of exchange within a formal economy, relating their negative aspects to corruption. This exercise enables us to integrate them into a model linking national institutional factors to the magnitude of cross-country FDI flows. In our empirical tests of FDI inflows in 55 countries across four distinct time periods, we find that the level of economic regulation is a major determinant of the extent of FDI inflows as well as the level of corruption, but corruption does not have an independent influence on levels of FDI inflows. Our results have important policy implications regarding the role of the state in influencing the location decisions of MNEs. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Ram Mudambi & Pietro Navarra & Andrew Delios, 2013. "Government regulation, corruption, and FDI," Asia Pacific Journal of Management, Springer, vol. 30(2), pages 487-511, June.
    • Handle: RePEc:kap:asiapa:v:30:y:2013:i:2:p:487-511
    DOI: 10.1007/s10490-012-9311-y
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