THE EFFECT OF CORRUPTION AND COUNTRY RISK ON FDI INFLOWS: EMPIRICAL EVIDENCE FROM DEVELOPING COUNTRIES

Year 2018, Issue: 21, 151 - 172, 04.04.2018

Salih Türedi

https://doi.org/10.18092/ulikidince.370653

Cited By: 3

Abstract

The aim of this study
is to empirically analyze the effect of corruption and country risk on foreign
direct investment (FDI) inflows. The study was carried out using the data of 49
developing countries for the 2002–2015 period. Relationships between the
variables were investigated by static and dynamic panel data methods. This
empirical analysis revealed the following general findings: i) a decline in
corruption and country risk positively affects FDI inflows; ii) financial risk,
which is a component of country risk, has no significant effect on FDI inflows,
whereas a fall in the level of economic and political risk accelerates FDI
inflows; iii) FDI inflows are most sensitive to economic risk. Based on these
results, it can be said that developing countries can attract more FDI by
creating a quality institutional structure, effectively fighting corruption,
and creating sound macroeconomic policies that improve the investment climate
and reduce cost, uncertainty, and risk perception.

Keywords

Corruption, Country risk, FDI, Panel data, Developing countries

THE EFFECT OF CORRUPTION AND COUNTRY RISK ON FDI INFLOWS: EMPIRICAL EVIDENCE FROM DEVELOPING COUNTRIES

Abstract

Bu çalışmanın
amacı, yolsuzluk ve ülke riskinin doğrudan yabancı yatırım (DYY) girişleri
üzerindeki etkisini ampirik olarak analiz etmektir. Gelişmekte olan 49 ülkenin
2002-2015 dönemine ait verileri kullanılarak yapılan çalışmada, değişkenler
arasındaki ilişkiler statik ve dinamik panel veri yöntemleri ile
araştırılmıştır. Ampirik analizin ortaya koyduğu genel bulgulara göre; i)
yolsuzluk ve ülke riskindeki azalma DYY girişlerini yönde pozitif
etkilemektedir. ii) ülke riskinin bileşenlerinden finansal risk DYY girişleri
üzerinde anlamlı etki yaratmazken, ekonomik ve politik risk düzeyindeki azalma DYY
girişlerini hızlandırmaktadır. iii) DYY girişleri en çok ekonomik riske karşı
duyarlıdır. Bu sonuçlardan hareketle, gelişmekte olan ülkelerin daha fazla DYY
çekebilmelerinin kaliteli bir kurumsal yapının oluşturularak yolsuzluklarla
etkin biçimde mücadele edilmesinin yanı sıra, yatırım ortamını iyileştirici,
maliyet, belirsizlik ve risk algısını azaltıcı sağlam makroekonomik politikalar
yoluyla mümkün olabileceği ifade edilebilir.

Keywords

Corruption, Country risk, FDI, Panel data, Developing countries

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