John Cassidy
University College Dublin
Dr John Cassidy is a lecturer at the UCD School of Business. His research has focused on determinants of FDI in East Asia specifically regarding Japanese investment in China. He also does research on US M&As in Ireland, technology adaptation in Vietnam, Corruption and FDI in east and southeast Asia.
This paper analyses the impact of corruption and other determinants on FDI inflows in Southeast Asian and East Asian countries from 2001 to 2012. Among the explored determinants of FDI, the corruption level of the host country has been found to be a significantly influential factor (Mauro, 1995). However, few studies analysed the effect of the corruption level on FDI inflows in Asia with regard to countries of various degrees of income. Thus, this paper attempts to comprehensively examine the determinants of the FDI inflows, with an emphasis on the corruption level of Asian countries. This paper apples a quantitative research methodology, utilising secondary data collected from international organisations such as IMF, the World Bank, the UNCTAD and Transparency International. It develops a model in which FDI is explained by corruption level, market size, GDP per capita, infrastructure, market openness, human resource quality, political and economic sustainability. The research findings advise that corruption in high and upper-middle income Southeast and East Asian economies negatively affects FDI inflows, while the corruption level in low and lower-middle-income economies is negatively related to FDI and this negative effect is not significant. The study also finds significant impacts of other control variables, including the GDP per capita, Market size, Infrastructure, Market Openness, Human Resource Quality, and Economic Sustainability to FDI levels in the host country. Overall, the results of this paper suggest that countries should pay adequate attention to the level of corruption. The impact level of corruption on FDI inflows also depends on the classification of a country based on the income.
