Abstract
AbstractIn this article, we assess whether the incidence of crime helps to explain the variation in sectoral FDI flows. Using a panel of 29 Organization of Economic Co‐operation and Development (OECD) countries for the period 2003–2012, we employ a generalized method of moments (GMM) estimation strategy due to the potential for endogeneity between our variables of interest. Our results indicate that crime deters investment to the service sector. In particular, this effect is observed in the following service industry subsector: financial services. Policymakers interested in boosting FDI in the affected sectors should be concerned with policies that focus on the reduction of criminal activities.
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