1. bookVolume 25 (2020): Issue 1 (March 2020)
Journal Details
License
Format
Journal
eISSN
2719-9452
First Published
01 Jan 2006
Publication timeframe
4 times per year
Languages
English, Polish
Open Access

An Assessment of Corruption’s Impact on the Inflow of Foreign Direct Investment (in the Case of Georgia, Armenia and Azerbaijan)

Published Online: 19 Aug 2021
Volume & Issue: Volume 25 (2020) - Issue 1 (March 2020)
Page range: 161 - 174
Received: 25 Nov 2019
Accepted: 22 Feb 2020
Journal Details
License
Format
Journal
eISSN
2719-9452
First Published
01 Jan 2006
Publication timeframe
4 times per year
Languages
English, Polish
Abstract

The aim of this paper is to investigate the impact of corruption on the inflow of foreign direct investment (FDI) in Georgia, Armenia and Azerbaijan, from 2012 to 2018. The study attempts to answer the question: “What effect does corruption have upon the level of foreign direct investment inflow to a country?” Using the data from UNCTAD for foreign direct investment and Corruption Perception Index from Transparency International, for a period of 7 years, 2012-2018, we evaluated the specific impact of corruptions on FDI using GDP as control variable. A regression model was developed to establish the relationship between FDI and Corruption Perception Index. Co-integrating Regression analysis was carried out using relevant econometric techniques. The model is based on a theoretical approach found in academic literature This exploratory paper results confirm the majority of literature and show a negative significant relation between the variables analysed but at a lower intensity than expected.

Keywords

Alemu M.A., Effects of Corruption on FDI Inflow in Asian Economies, “Seoul Journal of Economics” 2012, vol. 25, no. 4. Search in Google Scholar

Al-Sadiq, A., The Effects of Corruption on FDI Inflows, “Cato Journal” 2009, vol. 29, no. 2. Search in Google Scholar

Amarandei C.M., Corruption and Foreign Direct Investment. Evidence from Central and Eastern European States, http://www.ceswp.uaic.ro/articles/CESWP2013_V3_AMA.pdf. Search in Google Scholar

Amundsen I., Political Corruption: An Introduction to the Issues,. Chr. Michelsen Institute Development Studies and Human Rights, Working Paper, 1999. Search in Google Scholar

Aparna M., Foreign Direct Investment, Corruption, and Democracy, “Applied Economics” 2011, vol. 45, no. 8. Search in Google Scholar

Balboa J., Medalla, M. E., Anti-Corruption and Governance: The Philippine Experience. APEC Study Center Consortium Conference 2006, 1-28, Ho Chi Minh City, Viet Nam. Search in Google Scholar

Brada J.C., Corruption and Multinational Investment: Micro-foundations and Empirical evidence, “World Economic Journal” 2014. Search in Google Scholar

Castro C., Nunes, P., Does Corruption Inhibit Foreign Direct Investment?, “Revista de Ciencia Politica” 2013, vol. 51, no. 1.10.5354/0716-1077.2013.27418 Search in Google Scholar

Cuervo-Cazurra A., Who Cares about Corruption?, “Journal of International Business Studies” 2006, vol. 37, no. 6.10.1057/palgrave.jibs.8400223 Search in Google Scholar

Dahlström T., Johnson A., Bureaucratic Corruption, MNEs and FDI “Jönköping International Business School (JIBS)” 2007, paper no. 82. Search in Google Scholar

Habib M., Zurawicki L. Corruption and Foreign Direct Investment, “Journal of International Business Studies” 2002, vol. 33, no. 2.10.1057/palgrave.jibs.8491017 Search in Google Scholar

Jones J., Wren C., Foreign Direct Investment and the Regional Economy, Ashgate Publishing, Ltd. 2012. Search in Google Scholar

Kendall T., Zhou Y., The Impact of Corruption on FDI 2009, https://editorialexpress.com/cgibin/conference/download.cgi?db_name=serc2009&paper_id=212. Search in Google Scholar

Macrae J., Underdevelopment and the Economics of Corruption: A Game Theory Approach, “World Development” 1982, vol. 10, no. 8.10.1016/0305-750X(82)90093-6 Search in Google Scholar

Quazi M.R., Corruption and Foreign Direct Investment in East Asia and South Asia: An Econometric Study, “International Journal of Economics and Financial Issues” 2014, vol. 4, no. 2.10.5539/ibr.v7n12p44 Search in Google Scholar

Quazi R., Vemuri V., Soliman M., Impact of Corruption on Foreign Direct Investment in Africa, “International Business Research” 2014, vol. 7, no. 4.10.5539/ibr.v7n4p1 Search in Google Scholar

Runde D. F., The cost of corruption, 2014, https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/publication/140204_Hameed_CostsOfCorruption_Web.pdf. Search in Google Scholar

Teixeira C.A.A., Guimarães L., Corruption and FDI: Does the Use of Distinct Proxies for Corruption Matter?, “Journal of African Business” 2015, vol. 16, no. 1-2.10.1080/15228916.2015.1027881 Search in Google Scholar

Woo J.Y., The Impact of Corruption on a Country’s FDI attractiveness; A Panel Data Analysis, 1984-2004”, “Journal of International and Area Studies” 2010, vol. 17, no. 2. Search in Google Scholar

Worldbank, Combating Fraud and Corruption, 2017, www.ifc.org/wps/wcm/connect/TopicsExtCon-tent/IFCExternalCorporateSite/ACHome/. Search in Google Scholar

Recommended articles from Trend MD

Plan your remote conference with Sciendo