DOES CORRUPTION HAVE IMPACT ON FDI AND POVERTY? EVIDENCE FROM SELECTED SUB-SAHARAN AFRICAN COUNTRIES

Abstract

The study on the effects of corruption has attracted attention of many scholars in the world today. This study focus on corruption and its impacts on FDI inflow and poverty. It is argued that corruption does not only reduce FDI inflows in a country, but also cause poverty in the host country by negatively affecting and weakening social, economic and political institutions at different levels. Using data from World Bank group, 2016, the result of the cross-sectional setting showed that corruption negatively affect FDI inflow and it is significant. The investigation was started by using a cross-sectional data analysis on 34 countries for 11 years to confirm the former findings of authors. Therefore, a benchmark FDI theoretical model and equation in the methodology was constructed to test corruption and its effects on attraction of FDI. While, the link between corruption and poverty was confirmed and validated by the previous studies. Hence corruption must not only be controlled for political reasons but also for economic growth and prosperity for those host countries.

Keywords: FDI inflow, Poverty, Corruption, OLS, Sub-Saharan African countries.