Corruption and Foreign Direct Investment : The Case of South Asia

This paper empirically investigates the influence of corruption, bureaucratic quality and government stability on inward Foreign Direct Investment (FDI) to major SAARC nations including Bangladesh, India, Pakistan and Sri Lanka over the period of 1985-2008. Owing to the long-term relationship with the host, absence of corruption and bureaucratic interventions are crucial location advantages of host countries, especially in case of countries lacking abundant natural resources to attract foreign investors. The results through random effects panel estimation method indicate the significant effects of absence of corruption, honest public office holders, efficient bureaucracy and government stability for the foreign direct investors in SAARC nations