Do Countries with Similar Levels of Corruption Compete to Attract Foreign Investment? Evidence Using World Panel Data

Do Countries with Similar Levels of Corruption Compete to Attract Foreign Investment? Evidence Using World Panel Data

This paper examines whether foreign direct investment in one country helps to increase foreign investment in other countries with a similar degree of corruption. Our estimates are based on an unbalanced annual panel of 164 countries over the 2005–2015 period. Using spatial econometric techniques, ou...

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Bibliographic Details
Main Authors: Luisa Alamá-Sabater, Teresa Fernández-Núñez, Miguel Ángel Márquez, Javier Salinas-Jimenez
Format: Article
Language:English
Published: MDPI AG 2020-07-01
Series:Sustainability
Subjects:
foreign direct investment
sustainable development
corruption similarity
Spatial Econometrics
Online Access:https://www.mdpi.com/2071-1050/12/15/6194
Description
Summary:This paper examines whether foreign direct investment in one country helps to increase foreign investment in other countries with a similar degree of corruption. Our estimates are based on an unbalanced annual panel of 164 countries over the 2005–2015 period. Using spatial econometric techniques, our main findings reveal that foreign investment in one recipient country is complementary to that in countries with similar levels of corruption. Furthermore, our results point to the existence of different circuits of foreign direct capital among countries that are determined by corruption similarity. These results suggest important policy implications for countries aiming to attract foreign investment.
ISSN:2071-1050

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