Working Papers
Foreign Direct Investment and Corruption in Egypt: A Cointegration Analysis
No.
1408
Publisher
ERF
Date
October, 2020
Topic
O2. Development Planning and Policy
H5. National Government Expenditures and Related Policies
D7. Analysis of Collective Decision-Making
F2. International Factor Movements and International Business
This paper uses a time series analysis to estimate the impact of corruption on FDI in Egypt during the period 1970-2019 and to address some of the drawbacks of the empirical literature. Unit root and cointegration tests are used to ensure stationarity and long run relationship among variables of interest. The results show a significant positive relationship between FDI and corruption in Egypt. Since corruption is not found to hinder FDI inflows, treating corruption should be based on sound legal procedures that infringe neither on the freedom of FDI nor on the degree of openness of the economy, which are the real stimulants of FDI in Egypt.
Research Associates
Eman Moustafa
Research Manager, African Export-Import Bank (Afreximbank)