Measuring the Impact of Corruption on FDI Inflows in Developing Oil-Rich Countries

Many resource-rich developing nations experience low levels of economic growth despite their large resource endowment. One of the major channels contributing to this phenomenon -known as the “resource curse”- is corruption, including its effect on FDI inflows into a particular country. This paper looks specifically into countries with oil as their primary commodity to examine the difference in effect of the relationship between corruption and FDI. My research utilizes a panel analysis of countries over an 11-year period. The results using regression analysis show that corruption, which is generally higher in nations with large oil reserves, does reduce FDI inflows, but the relationship is not unique to oil-rich countries. This paper shows that policy decisions in oil rich countries suffering from the resource curse should not be unique compared to other resource rich nations