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Foreign direct investment & corruption in Sub-Saharan Africa: An empirical analysis at the local level

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  • Donaubauer, Julian
  • Kannen, Peter
  • Steglich, Frauke

Abstract

Geocoding firm-level data and matching them to georeferenced household survey data, we are the first to analyze whether the presence of foreign investors is associated with changes in local corruption around foreign-owned production facilities in Sub-Saharan African countries. Applying an estimation strategy that explores the spatial and temporal variation in the data, we find that the presence of foreign firms increases bribery among people living nearby. We show this effect to work through two mechanisms, namely via increased economic activity and partly via norm transmission.

Suggested Citation

  • Donaubauer, Julian & Kannen, Peter & Steglich, Frauke, 2018. "Foreign direct investment & corruption in Sub-Saharan Africa: An empirical analysis at the local level," Kiel Working Papers 2118, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:2118
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    References listed on IDEAS

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    Cited by:

    1. Grace Nkansa Asante & Kofi Kamasa & Myles Patrick Bartlett, 2022. "Foreign direct investment and economic growth nexus in ECOWAS: The leveraging effect of anti-corruption," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 14(2), pages 176-188.

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    More about this item

    Keywords

    FDI; corruption; georeferenced data; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • 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
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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