Corruption and FDI Inflows: Evidence from India and China

Hasan, Munir; Rahman, Mohd Nayyer; Iqbal, Badar Alam

doi:10.2478/mjss-2018-0088

Cited by 17 publications

(14 citation statements)

References 12 publications

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“…International Monetary Fund (1993) defines FDI as a foreign investment made to gain a permanent interest in a resident entity of an economy that is different from the economy of the investor which means that the investor must have a minimum of 10% of the outlay in the overseas company. Foreign direct investment (FDI) is also defined as an investment in equity with a least verge of 10% beside an ownership intention and long-term management interest (Hasan, Rahman & Iqbal, 2017). FDI fills three gaps in developing countries which includes: provision of funds for investment, availability of foreign currency and generation of tax revenues for the government (Quazi, Vemuri & Soliman, 2014).…”

Section: Introductionmentioning

confidence: 99%

Effect of Corruption on Foreign Direct Investment Inflows in Nigeria

Omodero

2019

Studia Universitatis „Vasile Goldis” Arad – Economics Series

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This study investigates the effect of corruption on foreign direct investment inflows in Nigeria, by using some control variables. The study covers a period from 1996 to 2017 and employs Ordinary Least Squares method to perform the multiple regression analysis with the aid of SPSS version 20. The findings indicate that corruption has a significant positive influence on FDI. Though the influence of inflation is significantly negative but exchange rate and Nigeria’s corruption ranking position have insignificant positive impact on FDI. The implication is that the poor legal framework and institutional qualities in Nigeria are helping corruption to thrive in all areas of Nigeria’s economy and might ruin the young generation if nothing is done urgently. The study finds support for helping hand theory of corruption and FDI and also establishes that inflation has a significant negative influence on FDI inflows in the country. Therefore, the study recommends establishment of strong institutional and legal system to curtail the prevailing situation in order to save the future of the country.

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Section: Introductionmentioning

confidence: 99%

Effect of Corruption on Foreign Direct Investment Inflows in Nigeria

Omodero

2019

Studia Universitatis „Vasile Goldis” Arad – Economics Series

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“…Findings from the study posited that BRI wields a significant impact on growth of Asian economies. Qualitative factors influencing the flow of FDI in the case of China and India are seen in the study of Hasan et al [ 19 ] as corruption was fingered to possess a negative effect on FDI in the case of India. On the other hand, corruption was found to possess a positive impact on FDI in the case of China.…”

Section: Theoretical Literaturementioning

confidence: 99%

Accounting for the symmetric and asymmetric effects of FDI-growth nexus amidst financial crises, economic crises and COVID-19 pandemic: application of hidden co-integration

et al. 2022

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This study investigates the symmetric and asymmetric effects of FDI-growth nexus amidst financial crises, economic crises and COVID-19 pandemic s in Nigeria over the period 1983–2020. Having confirmed the long-run stable state among the variables, the symmetric estimates suggest that the FDI inflow/outflow is significantly linked with economic growth both in the long and short run, while the asymmetric model suggests that the parameter estimates have asymmetric effects on economic growth during the economic crisis in Nigeria. Specifically, the positive shocks in FDI inflow/outflow generate a significant reducing impact on economic growth, while negative shocks in FDI inflow/outflow generate a significant increasing effect on economic growth. Based on this findings, the study suggests that policy option would need to generate more economic activities that would improve net inflow/outflow and cushion the effect of future crisis.

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“…To aid this endeavour of enhancing the pull factors of FDI, research has focused on unearthing the variables that influence the timing and direction of FDI flows. Generally, the size of markets (Bhasin and Garg, 2020), the availability and accessibility to scarce natural resources (Ndikumana and Sarr, 2019), labour productivity (Hasan et al , 2017; Markusen and Trofimenko, 2009) and purchasing power of the citizenry and/or the level of national income (Pečarić et al , 2021), as well as various other economic indices such as inflation (Golitsis et al , 2018), have a bearing on FDI. While there are a few contestations about the manner and direction of the impact of these variables on FDI, the general empirical consensus is that the consequences are directly positive such that as the variables improve, FDI inflow increases and vice versa.…”

Section: Literature Reviewmentioning

confidence: 99%

Non-linear ADRL estimation of corruption and FDI inflow to Ghana

Nsor-Ambala

Coffie

2021

JFC

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Purpose This paper aims to examine the effect of corruption on foreign direct investment (FDI) inflow in Ghana. This provides answers to the call for further empirical examination of the contextual impact of corruption on FDI inflow. Design/methodology/approach The study uses a non-linear ADRL time series econometric model to estimate data from the World Bank and the international country risk guide (1984–2019). Findings The study confirms the sand in the wheel and the grabbing hand hypothesis of the impact of control of corruption (CoC) on FDI both in the short and long run. However, degradation on the CoC index has a significant and more than a proportionate constraint on FDI inflows, while an improvement in CoC has no significant impact on improving FDI inflows. An explanation for this outcome was proposed after comparing this finding to a similar prior study with a Nigerian data set (Zangina and Hassan, 2020). The proposed explanation relied mainly on the rational expectation hypothesis and drawing elements of the efficient market hypothesis. FDI inflows do not react to outcomes or trajectories reasonably expected because such rationally expected future outcomes will have been modelled into existing FDI movement decisions. Instead, FDI flows react to “surprises” and often respond in a more than proportional manner. Practical implications Political leadership in Ghana should be conscious of the severe adverse effects of inaction or ineffective action in curbing corruption, leading to slippering in CoC rankings. In the case of Ghana, the dependence of FDI on CoC is even more pronounced as the other variables within the specified model show an insignificant impact on FDI. Additionally, admittedly aggregated cross-country data in econometric modelling is appealing and has some empirical basis, but these must not erode the relevance of country-specific studies as both are needed to support theorization. Originality/value The paper is among the first to test for the asymmetric relationship between corruption or its control thereof and FDI with a time series approach, and hence, the findings offer new insight.

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Corruption and FDI Inflows: Evidence from India and China

Cited by 17 publications

References 12 publications

Effect of Corruption on Foreign Direct Investment Inflows in Nigeria

Effect of Corruption on Foreign Direct Investment Inflows in Nigeria

Accounting for the symmetric and asymmetric effects of FDI-growth nexus amidst financial crises, economic crises and COVID-19 pandemic: application of hidden co-integration

Non-linear ADRL estimation of corruption and FDI inflow to Ghana

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