International journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN:2313-626X

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 Volume 5, Issue 3 (March 2018), Pages: 32-38

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 Original Research Paper

 Title: The effect of corruption, trade openness and political stability on foreign direct investment: Empirical evidence from BRIC countries

 Author(s): Ahmed Berhan Abdella 1, *, Navaz Naghavi 1, Benjamin Chan Yin Fah 2

 Affiliation(s):

 1Faculty of Business and Management, Asia Pacific University of Technology and Innovation (APU), Kuala Lumpur, Malaysia
 2Centre of Socioeconomic of Ageing, Asia Pacific University (APU), Technology Park Malaysia, Kuala Lumpur, Malaysia

 https://doi.org/10.21833/ijaas.2018.03.005

 Full Text - PDF          XML

 Abstract:

The decision of why a corporation would start or takeover a company in a foreign country rather than entering the foreign market through international trade has been a growing research topic for the last thirty years. This research aims to investigate the impact of corruption, trade openness, and political stability on foreign direct investments (FDI) in Brazil, Russia, India and China collectively. The study carried on the BRIC countries covered the period of 2002-2016, with total observations of 60 countries-years. The dependent variable for this research is Foreign Direct Investments (FDIs) and the independent variables are Corruption, Trade Openness and Political Stability. The research has used Panel Fully Modified Ordinary Least Squares (FM-OLS) cointegrating regression model to analyse the relationships. The findings show that the independent variable (Corruption) places no significant effect on the Dependent Variable (FDIs) in the BRIC countries. While the other two Independent Variables (Trade Openness and Political Stability) place a significant effect on the Foreign Direct Investments in BRIC countries. Moreover, it was found out that the direction of the relationship for both independent variables was positive. In addition, specific Panel Unit Root tests and Cointegration test were applied to meet confirm the reliability of the FM-OLS for panel data collected. Thus, this research will help the policy makers and research community with the knowledge of new dimensions regarding the topic. 

 © 2017 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords: Foreign direct investments, Corruption, Trade openness, Political stability, BRIC countries

 Article History: Received 19 September 2017, Received in revised form 28 December 2017, Accepted 31 December 2017

 Digital Object Identifier: 

 https://doi.org/10.21833/ijaas.2018.03.005

 Citation:

 Abdella AB, Naghavi N, and Fah BCY (2018). The effect of corruption, trade openness and political stability on foreign direct investment: Empirical evidence from BRIC countries. International Journal of Advanced and Applied Sciences, 5(3): 32-38

 Permanent Link:

 http://www.science-gate.com/IJAAS/2018/V5I3/Abdella.html

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