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Bureaucratic Corruption, MNEs and FDI

Author

Listed:
  • Dahlström, Tobias

    (Jönköping International Business School (JIBS), Jönköping)

  • Johnson, Andreas

    (Jönköping International Business School (JIBS), Jönköping)

Abstract

This paper adds to the limited number of studies analysing the relationship between host country corruption and FDI inflows. A model describes the incentives foreign MNEs and host country bureaucrats have for engaging in corruption and shows how corruption increases the MNE costs of operations in the host country. The model predicts that the costs caused by corruption reduce FDI inflows. Regression analysis using panel data finds that host country corruption has a significant negative effect on FDI inflows to developing economies but not for developed economies.

Suggested Citation

  • Dahlström, Tobias & Johnson, Andreas, 2007. "Bureaucratic Corruption, MNEs and FDI," Working Paper Series in Economics and Institutions of Innovation 82, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    • Handle: RePEc:hhs:cesisp:0082
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    References listed on IDEAS

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    Cited by:

    1. Karpaty, Patrik & Gustavsson Tingvall, Patrik, 2011. "Offshoring of Services and Corruption: Do Firms Escape Corrupt Countries?," Working Papers 2011:2, Örebro University, School of Business, revised 28 May 2012.
    2. Tingvall, Patrik Gustavsson, 2010. "Offshoring and Corruption: Does Corruption Matter," Working Paper Series in Economics and Institutions of Innovation 237, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    3. Adeel Ahmad DAR & Taj MUHAMMAD & M. Wasif SIDDIQI, 2020. "Bureaucratic Quality and FDI Inflows Nexus: A South Asian Perspective," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 149-168, September.
    4. Roberto Basile & Luigi Benfratello & Davide Castellani, 2005. "Attracting Foreign Direct Investments in Europe: Are Italian Regions Doomed?," Rivista di Politica Economica, SIPI Spa, vol. 95(1), pages 319-319, January-F.
    5. Poonam Singh, 2012. "Does Poor Quality of Institutions Attract Cross-Border Mergers and Acquisitions?," South Asian Journal of Macroeconomics and Public Finance, , vol. 1(2), pages 191-230, December.
    6. Dauti, Bardhyl, 2008. "Determinants of Foreign Direct Ivestment inflow in South East European Countries - Panel Estimation," MPRA Paper 18273, University Library of Munich, Germany.
    7. Hawkes, Denise Donna & Yerrabati, Sridevi, 2015. "Institutions and investment in South and East Asia & Pacific region: Evidence from meta-analysis," Economics Discussion Papers 2015-62, Kiel Institute for the World Economy (IfW Kiel).
    8. Turan Subasat & Sotirios Bellos, 2013. "Governance and foreign direct investment in Latin America: A panel gravity model approach," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 50(1), pages 107-131, May.
    9. Tingvall, Patrik, 2011. "Dynamic Effects of Corruption on Offshoring," Ratio Working Papers 182, The Ratio Institute.
    10. Toure Mamoudou & Cédric Achille Mbeng Mezui, 2017. "Working Paper 271 - Facteurs déterminants des IDE en Afrique," Working Paper Series 2388, African Development Bank.
    11. Sotirios Bellos & Turan Subasat, 2012. "Governance and foreign direct investment: a panel gravity model approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(3), pages 303-328, April.
    12. Patrik Karpaty & Patrik Tingvall, 2015. "Service Offshoring and Corruption: Do Firms Escape Corrupt Countries?," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 363-381, December.

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    More about this item

    Keywords

    corruption; foreign direct investment; multinational enterprises;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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