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Experts’ Perceptions versus Firms’ Experiences of Corruption and Foreign Direct Investment

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  • Gillanders, Robert
  • Parviainen, Sinikka

Abstract

This paper documents that standard measures of corruption based on the perceptions of experts and opinion surveys and measures based on the experiences of firms can in some cases lead to quite different conclusions as to how much of a problem corruption is in a country. We then show that while perceptions of corruption are significantly associated with the amount of foreign direct investment that a country attracts, the experience on the ground is not. This finding is robust to alternative perceptions and experience measures and the inclusion of standard empirical foreign direct investment model controls. When we look at establishment modes of foreign investors we find some evidence that direct investment that builds new operations from zero in a foreign country (greenfield investment) is significantly associated with the experience of corruption while mergers and acquisitions is driven by perceptions.

Suggested Citation

  • Gillanders, Robert & Parviainen, Sinikka, 2014. "Experts’ Perceptions versus Firms’ Experiences of Corruption and Foreign Direct Investment," MPRA Paper 58991, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:58991
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    References listed on IDEAS

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    Cited by:

    1. Robert Gillanders & Sinikka Parviainen, 2018. "Corruption and the shadow economy at the regional level," Review of Development Economics, Wiley Blackwell, vol. 22(4), pages 1729-1743, November.
    2. Tamanna Adhikari & Michael Breen & Robert Gillanders, 2017. "Are new states more corrupt? Expert opinions vs. firms’ experiences," Working Papers 201720, School of Economics, University College Dublin.

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    More about this item

    Keywords

    corruption; corruption experiences; corruption perceptions; foreign direct investment;
    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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