Title: Corruption and Private Domestic Investment: evidence from developing countries

Authors: Ali Al-Sadig

Addresses: Research and Statistic Department, Saudi Arabian Monetary Agency, P.O. Box 2992, Riyadh, 11169, Saudi Arabia

Abstract: While there is a large number of empirical studies on the effects of corruption on economic growth, studies on the relationship between corruption and Private Domestic Investment (PDI) are scared. Therefore, the main purpose of this study is to examine empirically the effects of corruption on the rate of PDI. We apply system Generalised Method of Moments (GMM) to cope with the potential simultaneity between PDI and corruption and we estimate the model based on panel data from 71 developing countries over the period 1984-2000. The empirical results show that corruption has a robust negative effect on the rate of private investment.

Keywords: PDI; private domestic investment; corruption; developing countries; private investment.

DOI: 10.1504/IJEPEE.2010.032794

International Journal of Economic Policy in Emerging Economies, 2010 Vol.3 No.1, pp.47 - 60

Published online: 22 Apr 2010 *

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