IJPSPA International Journal of Political Science and Public Administration 2788-8983 SvedbergOpen ijpspa-1-1-001 10.51483/IJPSPA.1.1.2021.1-11 Research Paper The effect of corruption on Foreign Direct Investment JúniorElias Lopes 1 * SousaKaroline 2 SilvaHércules 3 1Professor, Universidade Federal do Cariri, Brazil. E-mail: elias.junior@ufca.edu.br 2Student, Universidade Federal do Cariri, Student, Brazil. E-mail: karolinesousa1129@gmail.com 3Student, Universidade Federal do Cariri, Student, Brazi. E-mail: silvahercules183@gmail.com *Corresponding author: Elias Lopes Júnior, Universidade Federal do Cariri, Brazil. E-mail: elias.junior@ufca.edu.br 06 2021 1 1 1 11 Abstract

Foreign Direct Investment (FDI) is an element that can promote the growth of the country that will receive the resource. One factor that can influence the decision of investors and foreigners to choose the country in which they will invest is the governance environment of the host country. Based on this logic, this study analyzed the influence of corruption in attracting FDI. Data were collected from 184 countries between 2002 and 2016. The Panel Data technique with fixed effect was used, using two variables to represent corruption (control of corruption and corruption) and nine control variables (market size, domestic investment, infrastructure, interest rate, openness, labor force, GDP growth, donations of resources and quality of institutions). The proposed model showed that high corruption negatively affects the flow of FDI. In addition, the control variables that remained in the model were domestic investment, interest rate, labor force and GDP growth. Policy makers should be aware that the political environment is a crucial factor for FDI flow and policies should be properly structured to meet the basic requirements of attracting investment and thus economic growth in general.

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