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

Authors

Rainah Ginsad, Faculty of Business and Management, Universiti Teknologi MARA Sabah Branch, Kota Kinabalu Campus, MalaysiaFollow
Imbarine Bujang, Faculty of Business and Management, Universiti Teknologi MARA Sabah Branch, Kota Kinabalu Campus, MalaysiaFollow
Abdul Aziz Karia, Faculty of Business and Management, Universiti Teknologi MARA Sabah Branch, Kota Kinabalu Campus, MalaysiaFollow
Emelia Girau, Faculty of Accountancy, Universiti Teknologi MARA Sabah Branch, Kota Kinabalu Campus, MalaysiaFollow
Siti Rahayu Beli, Faculty of Business and Management, Universiti Teknologi MARA Sabah Branch, Kota Kinabalu Campus, MalaysiaFollow

Abstract

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.

Keywords

Corruption, Foreign Direct Investment, Emerging Economies, Asian, Panel Data

Publication Date

2024

Received Date

23-Oct-2023

Revised Date

2-Jan-2024

Accepted Date

28-Feb-2024

Recommended Citation

Ginsad, Rainah; Bujang, Imbarine; Karia, Abdul Aziz; Girau, Emelia; and Beli, Siti Rahayu (2024) "Does the Foreign Direct Investment in Emerging Asian Countries Get ‘Greased’ or ‘Sanded’ by Corruption? Evidence from GETS Model," ASEAN Journal on Science and Technology for Development: Vol. 41: No. 2, Article 8.
DOI: https://doi.org/10.61931/2224-9028.1576
Available at: https://ajstd.ubd.edu.bn/journal/vol41/iss2/8