{"title":"Foreign direct investment, corruption, and institutional reforms","authors":"R. Salvador","doi":"10.2298/pan181214011e","DOIUrl":null,"url":null,"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. Key words: Corruption, Lobbying, Institutional reforms, Foreign direct investment. JEL: F21, F30, K42","PeriodicalId":45222,"journal":{"name":"Panoeconomicus","volume":"1 1","pages":"11-11"},"PeriodicalIF":0.9000,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Panoeconomicus","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.2298/pan181214011e","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
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. Key words: Corruption, Lobbying, Institutional reforms, Foreign direct investment. JEL: F21, F30, K42
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