The impacts of corruption and environmental degradation on foreign direct investment: new evidence from the ASEAN+3 countries

Shaari, Mohd Shahidan; Esquivias, Miguel Angel; Ridzuan, Abdul Rahim; Zainal, Nor Fadzilah; Sugiharti, Lilik

doi:10.1080/23322039.2022.2124734

Cited by 17 publications

(12 citation statements)

References 51 publications

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“…Less corruption in advanced economies leads to higher FDI above a corruption threshold, whereas in emerging economies, where countries are more tolerant of corruption, it has less of an impact. Using a panel ARDL approach and data from 1995 to 2020, Shaari et al (2022) investigated whether corruption can increase or decrease FDI inflows as well as whether greater environmental degradation causes FDI. According to the findings, reducing corruption can eventually have a positive impact on FDI inflows, supporting the "sand the wheels" hypothesis in ASEANþ3.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Besides recent studies that have found support for either the “sand the wheels” hypothesis or the “grease the wheels” hypothesis, there are other studies that have found a non-linear corruption–FDI nexus, a corruption threshold effect or ambiguous results (Luu et al , 2019; Zangina and Hassan, 2020; Padmanabhan et al , 2020; Zander, 2021; Bekoe et al , 2021; Qureshi et al , 2021; Krifa-Schneider et al , 2022; Shaari et al , 2022). By gathering information from 131 nations, Luu et al (2019) looked into the effects of corruption on FDI and its two main entry points: greenfield investment (greenfield) and cross-border mergers and acquisitions (M&As).…”

Section: Literature Reviewmentioning

confidence: 99%

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The corruption-foreign direct investment nexus in sub-Saharan Africa. Fresh evidence from a panel threshold regression approach

Amoh

Abdul-Mumuni

Nsor-Ambala

et al. 2023

JFC

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Purpose Most emerging economies have made conscious efforts through policy initiatives to attract foreign direct investment (FDI). However, a significant obstacle to FDI inflow has been the prevalence of corruption in the host country. This study, therefore, aims to examine whether there is an optimum corruption value that results in threshold effects of corruption on FDI. Design/methodology/approach To achieve this objective, this study used Hansen’s (1999) panel threshold regression (PTR) model by using a panel data of 30 sub-Saharan African (SSA) countries from 2000 to 2021. Findings This study finds that the nexus between corruption and FDI has a single threshold effect, with a 5.37% optimum corruption threshold value. At this threshold value, corruption affects FDI negatively. Any corruption value that is below the threshold value also elicits a negative corruption–FDI relationship. Despite having a negative relationship when the corruption value is above the optimum corruption threshold, it is not statistically significant. Research limitations/implications The implication of the results is that it is deleterious to use corrupt practices to draw FDI to SSA nations. Originality/value To the best of the authors’ knowledge, this study is one of the first in the corruption–FDI nexus literature to use Hansen’s PTR model to estimate an optimal corruption threshold. The authors recommend that policymakers in the selected SSA countries reconsider the use of corruption to attract FDI because there is an optimal corruption threshold that could impact FDI in the host country.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

The corruption-foreign direct investment nexus in sub-Saharan Africa. Fresh evidence from a panel threshold regression approach

Amoh

Abdul-Mumuni

Nsor-Ambala

et al. 2023

JFC

View full text Add to dashboard Cite

show abstract

“…This model identifies two primary gaps, namely the savings-investment gap and the import-export gap, as key determinants of public debt [20,21]. Building upon the Harrod-Domar model, which highlights the interplay between savings, investment, and import capital [22], the two-gap model is particularly relevant for countries facing budget deficits due to low savings and investment [23]. Its simplicity has made it a useful tool employed by institutions like the Regional Development Bank and the International Monetary Fund (IMF) to assess appropriate debt levels for countries [24].…”

Section: Theoretical Backgroundmentioning

confidence: 99%

The Grim Cost of Economic Growth and Environmental Degradation: A Comprehensive Panel ARDL Study of Public Debt in the ASEAN-5 Countries

et al. 2023

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This study uses panel ARDL analysis to investigate the connections between GDP growth, environmental degradation, and public debt in the ASEAN-5 countries (Malaysia, Thailand, the Philippines, Singapore, and Indonesia) from 1996 to 2021. It appears that economic development can increase public debt, but investment can reduce public debt in the long run. Moreover, there is a positive correlation between savings and public debt, but only in the short run. These findings raise important considerations for policymakers in striking a balance between economic development, environmental sustainability, and public debt. This study also suggests that savings may positively affect public debt in Indonesia. In contrast, investment may raise debt in the short term in Malaysia, the Philippines, and Singapore. The possible effects of corruption on public debt in the Philippines and environmental damage in both that country and Thailand are also highlighted. Keeping public debt at a manageable level requires policies that balance economic development and environmental protection, as emphasized by this research.

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“…First, it contributes to the literature by filling the gap in knowledge by investigating the interconnectedness between macroeconomic indicators and renewable energy in Malaysia for the period between 1970 and 2020. The unique study in this country is because Malaysia has a more settled policy but experiences the lowest renewable consumption compared to the neighboring countries (e.g., Indonesia, Philippines, and Thailand) [31]. In addition, Malaysia possesses rich natural resources that can promote more clean energy sources for the generation of renewable energy.…”

Section: Introductionmentioning

confidence: 99%

Comprehensive Outlook on Macroeconomic Determinants for Renewable Energy in Malaysia

et al. 2023

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Mitigating global warming has been a challenge, and policymakers are responding to this issue by strengthening the commitment to enhance the renewable energy target from 20 to 31 percent in 2025 for Malaysia. However, adopting renewable energy in stages based solely on microeconomic factors, such as the price of energy, is insufficient. Thus, it is essential to investigate the macroeconomic variables that influence the share of renewable energy in Malaysia. In detail, this study introduces selected macroeconomic indicators, including gross domestic investment, domestic investment, foreign direct investment, trade openness, urbanization, financial development, and carbon emissions level, and their impact on renewable energy in Malaysia. The study utilized ARDL (Auto-Regressive-Distributed Lag) estimation based on annual time series data spanning 50 years of observations, beginning in 1971 and ending in 2020. Long-run elasticities show that greater economic development and urbanization increase the proportion of renewable energy. In contrast, increased foreign investment, trade liberalization, and carbon emissions could reduce the use of these clean energies. This paper concludes with a policy recommendation that could assist the country in achieving its goal of implementing a low-carbon, renewable energy-focused state policy.

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The impacts of corruption and environmental degradation on foreign direct investment: new evidence from the ASEAN+3 countries

Cited by 17 publications

References 51 publications

The corruption-foreign direct investment nexus in sub-Saharan Africa. Fresh evidence from a panel threshold regression approach

The corruption-foreign direct investment nexus in sub-Saharan Africa. Fresh evidence from a panel threshold regression approach

The Grim Cost of Economic Growth and Environmental Degradation: A Comprehensive Panel ARDL Study of Public Debt in the ASEAN-5 Countries

Comprehensive Outlook on Macroeconomic Determinants for Renewable Energy in Malaysia

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