Does Corruption Act as a Deterrent to Foreign Direct Investment in Developing Countries?
Articles
Sanjib Guha
Newport University, USA
Niazur Rahim
Newport University, USA
Bhagaban Panigrahi
Norfolk State University, USA
Anh D. Ngo
Norfolk State University, USA
Published 2020-05-29
https://doi.org/10.15388/omee.2020.11.21
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Keywords

corruption
Foreign Direct Investment
developing countries

How to Cite

Guha , S. (2020) “Does Corruption Act as a Deterrent to Foreign Direct Investment in Developing Countries?”, Organizations and Markets in Emerging Economies, 11(1), pp. 18–34. doi:10.15388/omee.2020.11.21.

Abstract

Developing countries institute policies to attract Foreign Direct Investment (FDI) that promotes growth and development. Corruption disrupts and complicates the implementation of policies that govern the inflows of FDI and the operations of foreign firms; such interference with policies is more than likely to disrupt and lower the inflows of FDI. This paper evaluates whether or not corruption reduces inflows of FDI into each and every developing country. Our study shows that developing countries with high growth rate (> 6% annual GDP growth) attract more FDI than countries with low growth rates although they are both steeped in corruption. Multi-national Corporations (MNCs) seem willing to cope with corruption in countries with high growth rates.

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