Foreign investment and bribery: A firm-level analysis of corruption in Vietnam
Abstract
Among the concerns faced by countries pondering the costs and benefits of greater
economic openness to international capital flows is the worry that new and powerful
external actors will exert a corrupting influence on the domestic economy. In this
paper, we use a novel empirical strategy, drawn from research in experimental psychology,
to test the linkage between foreign direct investment (FDI) and corruption. The prevailing
literature has produced confused and contradictory results on this vital relationship
due to errors in their measurement of corruption which are correlated with FDI inflows.
When a less biased operationalization is employed, we find clear evidence of corruption
during both registration and procurement procedures in Vietnam. The prevalence of
corruption, however, is not associated with inflows of FDI. On the contrary, one measure
of economic openness appears to be the most important driver of reductions in Vietnamese
corruption: the wave of domestic legislation, which accompanied the country's bilateral
trade liberalization agreement with the United States (US-BTA), significantly reduced
bribery during business registration. © 2011 Elsevier Inc.
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https://hdl.handle.net/10161/17760Published Version (Please cite this version)
10.1016/j.asieco.2011.11.006Publication Info
Georguiev, D; & Malesky, EJ (2012). Foreign investment and bribery: A firm-level analysis of corruption in Vietnam. Journal of Asian Economics, 23(2). pp. 111-129. 10.1016/j.asieco.2011.11.006. Retrieved from https://hdl.handle.net/10161/17760.This is constructed from limited available data and may be imprecise. To cite this
article, please review & use the official citation provided by the journal.
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Show full item recordScholars@Duke
Edmund Malesky
Professor of Political Science
Malesky is a specialist on Southeast Asia, particularly Vietnam. Currently, Malesky's
research agenda is very much at the intersection of Comparative and International
Political Economy, falling into three major categories: 1) Authoritarian political
institutions and their consequences; 2) The political influence of foreign direct
investment and multinational corporations; and 3) Political institutions, private
business development, and formalization.

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