Corruption and the composition of foreign direct investment - firm-level evidence

摘要: The authors study the impact of corruption in a host country on foreign investors' preference for joint venture, or wholly owned subsidiary. Their simple model highlights basic tradeoff using local partners. On one hand, makes bureaucracy less transparent, and increases value partner to cut through bureaucratic maze. other decreases effective protection an intangible assets, reduces probability that disputes between domestic partners, will be adjudicated fairly, which having partner. As investor's technological sophistication increases, so does importance protecting tilts away from ventures corrupt country. Empirical tests this hypothesis firm-level data show inward direct investment, shifts ownership structure toward ventures. Conditional investment taking place, increase level found Hungary Azerbaijan, subsidiary by 10 20 percent. Technologically more advanced firms are likely engage ventures, however. find support view U.S. averse countries than investors - possibly because Foreign Practices Act, stipulates penalties executives companies whose employees, partners paying bribes. But although retain full countries, they not undertake those countries.