![]() With the Trump Administration, the situation has changed dramatically as President Trump is supportive of neither multilateralism in general nor of the EU, which is weakened through BREXIT, in particular. Since 1991 there has been a reinforcement of the World Market Economy, not least since China and the, then new Russian Federation have joined the World Trade Organization and because of EU Eastern enlargement and ASEAN integration deepening, while the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) negotiations seemed to indicate stronger regional integration dynamics. Effective per capita lifetime income means that this income category is net of health care expenditures which relative to GDP is 1/3 higher in the US than in Germany and France in addition, the relevant comparisons (Baier and Welfens 2019) take into account that West European countries have more leisure time and higherpaidvacations than US workers. At the same time, it is remarkable that in 2018, the US Council of Economic Advisors argued that Scandinavian EU countries in 2016 were far behind the US in terms of per capita consumption figures, but these arguments are quite inaccurate if one considers effective lifetime per capita consumption Norway, for example, is no longer 18 points behinds the US as argued in the paper of the Council of Economic Advisers (2018b), rather an adequate lifetime perspective shows that Norway is in fact slightly ahead of the US and if one compares the US lifetime effective per capita GDP with that of Germany and Francewhere the populations enjoy higher life expectancy than in the United Statesthe figure for the three countries (with real per capita GDP growth rates in all three countries assumed to be identical in the long run) are equal as the subsequent Table 1 shows. The general effect of corruption harms FDI flows, as shown by the Panama Papers revelation. Therefore, it seems that corruption has complex country specific effects and that target and source countries have to adopt varying policies with regards to corruption. The Panama Papers variable shows strong evidence, that the release of the Panama Papers resulted in a drop in FDI flows. ![]() Findings are ambiguous in that corruption is positively correlated with FDI inflows in the target country and negatively correlated with FDI inflows in the origin country. Then, a gravity model with dyadic and time-fixed effects is employed to analyze the data. Finally, the difference between corruption levels in the target and the origin country, will be examined. ![]() To further analyze the effects of corruption the Panama Papers revelation is used as a corruption increasing event and the implementation into law of the OECD Anti-Bribery Convention is used as a corruption decreasing event. ![]() For the empirical analysis, a dataset consisting of bilateral FDI data from the OECD and the control of corruption measure from the World Governance Indicators of the World Bank is compiled. The literature is thus far divided regarding the effects of corruption: One hypothesis argues that corruption greases the wheels of government and is therefore beneficial while the other hypothesis argues that it sands the wheels of government leading to suboptimal results in an economy. In this paper, the effect of corruption on foreign direct investment (FDI) flows is analyzed.
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