Corruption and FDI Inflows: Evidence from India and China

Abstract

Foreign Direct Investment (FDI) is considered to be influenced not only by quantitative factors but also by qualitative factors. However, the present literature related to FDI focus more on quantitative factors rather than qualitative factors. One reason is that FDI is itself based on a quantitative benchmark (10% or more investment in equity). The qualitative factors that are related to FDI are governance, democracy, human development index etc. In the present study an endeavor is made to understand that how corruption influence FDI decision. FDI is taken in terms of percentage of GDP and Corruption is represented by Corruption Perception Index. The sample period of the study is from 1995 to 2014.