KTH/CESIS Working Paper Series in Economics and Institutions of Innovation
Bureaucratic Corruption, MNEs and FDI
() and Andreas Johnson
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.
Keywords: corruption; foreign direct investment; multinational enterprises; (follow links to similar papers)
JEL-Codes: D73; F21; F23; (follow links to similar papers)
40 pages, February 13, 2007
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