Part of the Problem or Part of the Solution? MNEs, FDI, and the Cycle of Corruption in Africa

Abstract

Corruption is a persistent and pervasive concern worldwide, leading to lower levels of economic growth, the erosion of political and legal institutions, and decreased foreign and domestic investment. Yet, many questions remain about the role that multinational enterprises (MNEs) play in exacerbating or mitigating corruption. We address such questions by examining corruption in sub-Saharan Africa, a context with increasing levels of economic growth and foreign investment, but varying levels of success in addressing corruption. We generate new insights with respect to the nature of corruption itself, causes of corruption, consequences of corruption, and how corruption can be fought. We find that rather than corruption being an inherently unavoidable ‘cost of doing business’ in developing countries, the attributes of FDI and actions of MNEs play a significant role in influencing whether corrupt activities are enabled or curbed in a host country.