Is Corruption Good or Bad for FDI? Empirical Evidence from Asia, Africa and Latin America

  • Abdul Jalil Quaid-i-Azam University, School of Economics, Islamabad, Pakistan
  • Amina Qureshi Quaid-i-Azam University, School of Economics, Islamabad, Pakistan
  • Mete Feridun Eastern Mediterranean University, Faculty of Business and Economics, Mersin, Turkey

Abstract

This article revisits the relationship between corruption and Foreign Direct Investment inflows in a panel of 42 countries from 1984 to 2012 using pooled mean group estimator in a dynamic heterogeneous panel setting using Westerlund and ARDL panel cointegration tests where the estimations are carried out by three different estimators: the pooled mean group (PMG), mean group (MG), and the dynamic fixed effect (DFE) estimators in order to examine both the long- and short-term effects of corruption on FDI inflows. The results suggest that corruption has a positive impact on FDI inflows in the case of Asia and Africa; and a negative impact in the case of Latin America.


Key words: FDI, Corruption, Panel data.
JEL: B28, F15.

How to Cite
Jalil A., Qureshi A., & Feridun M. (2016). Is Corruption Good or Bad for FDI? Empirical Evidence from Asia, Africa and Latin America. Panoeconomicus, 63(3), 259-271. doi:10.2298/PAN1603259J
Section
Original scientific paper