The assessment of corruption impact on the inflow of foreign direct investment (in the case of Georgia, Armenia and Azerbaijan).

Abstract

The aim of this study is to investigate the influence of corruption on the inflow of foreign direct investment (FDI) in Georgia, Armenia and Azerbaijan, from 2012 till 2018. The study attempts to answer the question: “What effect does corruption have upon the volume of foreign direct investment inflow to a country?” Using the statistical data from UNCTAD for foreign direct investment and Corruption Perception Index from Transparency International, for a period of 7 years, 2012-2018, we assess the specific influence of corruption on FDI using GDP as the control variable. A regression model was developed to establish the relationship between FDI and Corruption Perception Index. Co-integrating Regression analysis was carried out using relevant econometric techniques. The model is based on a theoretical approach found in relevant economic literature. The paper findings confirm the majority of modern literature and show a negative significant correlation between the variables analyzed, but at a lower intensity than expected.