Abstract

In this study, we expand our understanding of the determinants of foreign Direct Investment by developing more nuanced versions of corruption as well as conducting our research both at the individual and group source country level. We breakdown down corruption into four indices. First, corruption is defined as either predictable or unpredictable. Second, corrupt politicians can take a short or long-term approach to bribery. Third, corruption can be either organized or disorganized. Finally, we examine if a lower corruption rating of a host country, relative to neighboring potential recipients of foreign Direct Investment, influences foreign investors. Empirical results show support for some of our indices but not for others. Conclusions from this study point to the need for further research and public debate in order to better understand the relationship between corruption and foreign Direct Investment.

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