Analyzing the relationship between foreign direct investment and privatization in the European Union Founder Nations by using panel data approach

Abstract

Foreign direct investment (FDI) and privatization are two of the most important components in liberalization World. The aim of this study is to analyze whether there exist a statistically significant relationship between FDI and privatization, or not. To do so, a panel data sample of fourteen European Union (EU) Founder Nations in 1998-2012 was used to estimate various panel data models. The special feature of panel data is that it allows researchers to construct and test more realistic behavioral models that could not be identified using crosssection or time series data alone. Based on the sample results, between privatization as the primary independent variable and FDI was found a statistically significant positive relationship. Although other explanatory variables such as growth, trade openness, and corruption perceptions index, were found to have statistically significant effects on FDI, budget deficit was found to be statistically insignificant. Moreover, statistically significant parameters' signs showed that all of the economic expectations were satisfied.

Researching the impact of corruption and organized crime on FDI in Europe: a literature review

“…Therefore, the main indicator used in 99% of the research papers is Transparency International Corruption Perception Index, as being the most reliable source of data as an index that scores countries on the perceived levels of government corruption by country. As the corruption perceptions index increases, foreign direct investment is expected to decrease [24] Only one paper was determining the level of corruption using Freedom House's Nations in Transit rating, acknowledging limitations of Transparency International Corruption Perception index (i.e., subjective measurement from expert groups and slow changes over time), therefore seeking to conduct a robustness check with a different measure of corruption [25].…”

Corruption and Inflation in Agricultural Production: The Problem of the Chicken and the Egg

“…The literature has already identified several consequences of corruption. Corruption has real impacts on the development of societies with multidimensional implications (Idrovo et al 2010), including healthy life expectancy (Islam et al 2018), public health conditions (Ortega et al 2016), public finances (Shah et al 2019), foreign direct investment (Tuzunturk et al 2018), economic growth (Mensah 2014) and even agricultural prices (Ruengdet and Wongsurawat 2015).…”