Foreign direct investment and corruption

Corruption is the abuse of public authority and discretion for private gain. Corruption is perceived as detrimental to investment as it acts like a tax on investment by increasing the cost of doing business. However, the efficient grease hypothesis argues that corruption could increase investment as it acts as grease money that enables firms to avoid bureaucratic red tape and expedite the decision making process. This study attempts to build empirical models to investigate the relationship between foreign direct investment and corruption and identify the determinants of corruption itself. As tolerance towards corruption tends to vary from country to country, countries are disaggregated into developed economies and developing economies. Additionally, there are four regions within the developing economies group to take into account intrinsic differences in perceptions of and attitudes towards corruption, as well as cultural and geographical differences. The dissertation finds that corruption is deleterious for FDI inflows in developed countries, but is somewhat beneficial for attracting FDI inflows in developing economies. However, when developing countries are disaggregated into several regions, the effect of corruption on FDI inflows fades away. Furthermore, corruption can be caused by both economic and institutional factors. It is also confirmed that factors influencing corruption vary among developed countries, developing countries and within regions of developing countries. The importance of institutional factors makes it clear that the institutional framework is important for explaining corruption, no matter whether a country is a developed or developing one.

Name thesis:degree_name

Doctor of Philosophy (Ph.D.)

Level thesis:degree_level

Doctoral

Discipline thesis:degree_discipline

Economics

Grantor dc:publisher

Colorado State University. Libraries

Year dc:date.issued

2012

Authors dc:creator

• Ardiyanto, Ferry, author
• Cutler, Harvey, advisor
• Braunstein, Elissa, committee member
• Vasudevan, Ramaa, committee member
• Koontz, Stephen, committee member

• corruption
• foreign direct investment
• developing
• developed

Statement dc:rights

• Copyright and other restrictions may apply. User is responsible for compliance with all applicable laws. For information about copyright law, please see https://libguides.colostate.edu/copyright.

Language dc:language.iso

eng, English

Identifier URI

https://doi.org/10.25675/3.018523

Identifier

ETDF2012500282ECON

OAI identifier oai:identifier

oai:mountainscholar.org:10217/71542