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- Title
Foreign Direct Investment, Corruption, and Institutional Reforms.
- Authors
Salvador Espinosa-Ramirez, Rafael
- Abstract
Corruption impacts the competitive conditions among firms and the flow of foreign investment. Institutional reforms made for fighting against corruption are sometimes useless. We develop a model in which a corrupted government tries to set an optimal institutional level taking into account the cost of this policy on foreign investment, the benefit of a corrupted domestic firm and the benefit of local citizens. A political contribution is made by a corrupted lobby group in order to benefit from a lower institutional level. Our results suggest that the optimal institutional level depends on the degree of efficiency of firms and the level of corruption of the host government.
- Subjects
FOREIGN investments; CORRUPTION; REFORMS; ACCOUNTING policies
- Publication
Panoeconomicus, 2022, Vol 69, Issue 1, p17
- ISSN
1452-595X
- Publication type
Article
- DOI
10.2298/PAN181214011E