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The impact of the shadow economy on foreign direct investment

Author

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  • Hoang Van Cuong
  • Hiep Ngoc Luu
  • Le Quoc Tuan

Abstract

This study investigates the impact of the shadow economy on foreign direct investment (FDI). The result shows that the shadow economy exhibits no clear impact on FDI inflow. However, examining FDI by its types of entry, we find that the shadow economy positively influences greenfield investments and negatively affects cross-border M&As. The results are robust to a number of sensitivity checks.

Suggested Citation

  • Hoang Van Cuong & Hiep Ngoc Luu & Le Quoc Tuan, 2021. "The impact of the shadow economy on foreign direct investment," Applied Economics Letters, Taylor & Francis Journals, vol. 28(5), pages 391-396, March.
  • Handle: RePEc:taf:apeclt:v:28:y:2021:i:5:p:391-396
    DOI: 10.1080/13504851.2020.1757027
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    Cited by:

    1. Tobias Zander, 2023. "FDI Flows and the Effects of the Shadow Economy: Evidence from Gravity Modelling," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 9(4), pages 429-454, October.
    2. Cassandra E DiRienzo & Jayoti Das, 2021. "Formal Female Entrepreneurship and the Shadow Economy," Journal of Economics and Behavioral Studies, AMH International, vol. 13(5), pages 63-72.

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