Impact of corruption on foreign direct investment and tax revenues
Using Transparency International’s Corruption Perceptions Index (CPI), this paper establishes a statistically significant link between CPI and foreign direct investment (FDI) flows to 54 developing and developed countries. In addition to each country’s CPI, several location and economic characterist...
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| Veröffentlicht in: | Journal of public budgeting, accounting & financial management accounting & financial management, 2005-03, Vol.17 (3), p.313-341 |
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| container_title | Journal of public budgeting, accounting & financial management |
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| creator | Ketkar, Kusum W. Murtuza, Athar Ketkar, Suhas L. |
| description | Using Transparency International’s Corruption Perceptions Index (CPI), this paper establishes a statistically significant link between CPI and foreign direct investment (FDI) flows to 54 developing and developed countries. In addition to each country’s CPI, several location and economic characteristics are also postulated to influence FDI. For a group of 22 developing countries, the paper then simulates the impact of an improvement in the CPI score on FDI. This simulation shows that a one point improvement in CPI would generate on average additional FDI of 0.5% of GDP. For instance, the gain in annual FDI would be $7.5 billion for India and $18 billion for China. The paper further simulates the effects of larger FDI on the generation of taxable income and tax revenues in each country using country-specific rates of return on US investment and the highest marginal corporate tax rate in each country. This simulation shows that a three point improvement in CPI would more than double the corporate tax take on average with the biggest beneficiaries such as India, Turkey, Egypt, South Korea, the Philippines and Thailand. |
| doi_str_mv | 10.1108/JPBAFM-17-03-2005-B004 |
| format | Article |
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In addition to each country’s CPI, several location and economic characteristics are also postulated to influence FDI. For a group of 22 developing countries, the paper then simulates the impact of an improvement in the CPI score on FDI. This simulation shows that a one point improvement in CPI would generate on average additional FDI of 0.5% of GDP. For instance, the gain in annual FDI would be $7.5 billion for India and $18 billion for China. The paper further simulates the effects of larger FDI on the generation of taxable income and tax revenues in each country using country-specific rates of return on US investment and the highest marginal corporate tax rate in each country. 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| identifier | ISSN: 1096-3367 |
| ispartof | Journal of public budgeting, accounting & financial management, 2005-03, Vol.17 (3), p.313-341 |
| issn | 1096-3367 1945-1814 |
| language | eng |
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| source | PAIS Index; Standard: Emerald eJournal Premier Collection |
| subjects | Bribery Corporate taxes Correlation analysis Corruption Corruption in government Developing countries Economic development Economic impact Foreign investment Industrialized nations International LDCs Perceptions Rates of return Studies Tax rates Tax revenues Taxable income |
| title | Impact of corruption on foreign direct investment and tax revenues |
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