Corruption and Foreign Direct Investment (FDI) in ASEAN-5: A Panel Evidence

Bakri Abdul Karim (Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS))
Zulkefly Abdul Karim (UKM)
Mohamad Naufal Nasharuddin (UNIMAS)

Economics and Finance in Indonesia
Volume 64, Number 2, December 2018

This paper examines the effects of corruption on the inflow of FDI in ASEAN-5 countries by controlling twomacroeconomic variables namely Gross Domestic Product (GDP) and inflation. Using a static panel dataestimation, the results show the significant relationship between corruption and Gross Domestic Product(GDP) on the inflow of FDI in ASEAN-5. This results indicate that less corrupted countries and largermarket size would attract more FDI inflows. The policy implications from this study suggests that ASEAN-5governments need to have concerted and continues efforts in improving the integrity and credibility of theiradministration and transactions. In addition, maintaining their sustainable of economic growth is also crucial as a full factor in attracting more FDI inflows in future.