An Assessment of Corruption’s Impact on the Inflow of Foreign Direct Investment (in the Case of Georgia, Armenia and Azerbaijan)

Abstract

The aim of this paper is to investigate the impact of corruption on the inflow of foreign direct investment (FDI) in Georgia, Armenia and Azerbaijan, from 2012 to 2018. The study attempts to answer the question: “What effect does corruption have upon the level of foreign direct investment inflow to a country?” Using the data from UNCTAD for foreign direct investment and Corruption Perception Index from Transparency International, for a period of 7 years, 2012-2018, we evaluated the specific impact of corruptions on FDI using GDP as control variable. A regression model was developed to establish the relationship between FDI and Corruption Perception Index. Co-integrating Regression analysis was carried out using relevant econometric techniques. The model is based on a theoretical approach found in academic literature This exploratory paper results confirm the majority of literature and show a negative significant relation between the variables analysed but at a lower intensity than expected.