Do Corruption and Trade Openness Impede FDI?
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Abstract
Foreign direct investment (FDI) has been given much attention
in the recent past just because of its contribution to economic
development. However, there are several socio-economic
factors that impede FDI. Therefore, the objective of current
study is to probe whether corruption and trade openness affect
FDI. The study uses data from 1990-2015 for SAARC countries
and employs panel ARDL model to retrieve short- and long-run
results. The findings reveal that corruption plunges the FDI in
long-run, while trade openness increases FDI. On the contrary,
we report heterogeneous results in short-run. Additionally, we
deduce a few policy implications based on the findings of this
study.
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