Munich Personal RePEc Archive

Experts’ Perceptions versus Firms’ Experiences of Corruption and Foreign Direct Investment

Gillanders, Robert and Parviainen, Sinikka (2014): Experts’ Perceptions versus Firms’ Experiences of Corruption and Foreign Direct Investment.

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Abstract

This paper documents that standard measures of corruption based on the perceptions of experts and opinion surveys and measures based on the experiences of firms can in some cases lead to quite different conclusions as to how much of a problem corruption is in a country. We then show that while perceptions of corruption are significantly associated with the amount of foreign direct investment that a country attracts, the experience on the ground is not. This finding is robust to alternative perceptions and experience measures and the inclusion of standard empirical foreign direct investment model controls. When we look at establishment modes of foreign investors we find some evidence that direct investment that builds new operations from zero in a foreign country (greenfield investment) is significantly associated with the experience of corruption while mergers and acquisitions is driven by perceptions.

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