Does the Foreign Direct Investment in Emerging Asian Countries Get 'Greased' or 'Sanded' by Corruption? Evidence from GETS Model

• Published in: ASEAN Journal on Science and Technology for Development
• Main Author: Ginsad R.; Bujang I.; Karia A.A.; Girau E.; Beli S.R.
• Format: Article
• Language: English
• Published: University of Brunei Darussalam 2024
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85195093964&doi=10.61931%2f2224-9028.1576&partnerID=40&md5=17f357b3700c42a798d199851136340e

Inflows of foreign direct investment (FDI) considerably boost industrialization and economic growth in emerging economies. Corruption, human capital, and the economic environment are just a few factors mentioned in the literature as influencing FDI inflow. The impact of corruption on FDI, whether FDI is greased or sanded by corruption, has received greater interest in recent empirical study. This study analysed the impact of the Corruption Perception Index (CPI) on foreign direct investment (FDI) in selected Asian emerging economies. Utilising annual panel data covering 22 selected Asian emerging economies, this study uses the General-to-specific (GETS) model to analyse the impact. The overall findings support the “grease the wheel” theory by indicating a significant negative relationship between the CPI and FDI. This indicates corruption is anticipated to speed up business processes among emerging economies. The results may suggest that the government create specific policies to speed up the regulatory process that hinders investment. © 2024 University of Brunei Darussalam. All rights reserved.