Evidence on corruption as an incentive for foreign direct investment [An article from: European Journal of Political Economy]

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Description:
This paper assesses the relationship between corruption and inward foreign direct investment (FDI). Previous research has presumed that corruption directly enters the cost function of multinationals, suggesting a negative relationship between corruption and FDI. For a sample of 73 developed and less developed countries and the time period 1995-1999, we find a clear positive relationship between corruption and FDI. Corruption is thus a stimulus for FDI.