Is corruption good or bad for FDI? Empirical evidence from Asia, Africa and Latin America
This article revisits the relationship between corruption and Foreign Direct Investment inflows in a panel of 42 countries from 1984 to 2012 using pooled mean group estimator in a dynamic heterogeneous panel setting using Westerlund and ARDL panel cointegration tests where the estimations are carried out by three different estimators: the pooled mean group (PMG) mean group (MG) and the dynamic fixed effect (DFE) estimators in order to examine both the long and short term effects of corruption on FDI inflows. The results suggest that corruption has a positive impact on FDI inflows in the case of Asia and Africa; and a negative impact in the case of Latin America.