Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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Antecedent of Foreign Direct Investment (FDI): Focusing on the Moderating Effect of Absolute Corruption and Relative Corruption

해외직접투자(FDI)의 결정요인 분석: 절대적 부패 수준과 상대적 부패 수준의 조절 효과를 중심으로

  • Do-Eui Kim (Sogang Business School, Sogang University)
  • Received : 2021.04.11
  • Accepted : 2021.04.29
  • Published : 2021.04.30
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Abstract

Several previous studies have not been able to derive consistent research results on the impact of the level of corruption in local countries on foreign direct investment. Therefore, in order to suggest that this study should consider the relative level of corruption rather than the level of absolute corruption, 1) first, examine the moderating effect of the absolute level of corruption on the determinants of foreign direct investment, and 2) examine the moderating effect of the relative corruption on the determinants of foreign direct investment. This study collected 9-year data from 2012 to 2020 based on the Corruption Perceptions Index (CPI) published by Transparency International. A total of 549 observations (country-year) from 82 countries were sampled and a generalized estimation equation (GEE) analysis was performed. As a result of empirical analysis, it was found that the moderating effect of absolute corruption did not appear, whereas the moderating effect of relative corruption reversed the negative (-) relationship between cultural distance and foreign direct investment into a positive (+) relationship. Based on these empirical results, this study suggest that Korean companies need to consider the relative level of corruption with Korea instead of the absolute level of corruption of the investee when conducting foreign direct investment.

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