THE IMPACT OF BRIBERY ON FOREIGN DIRECT INVESTMENT: THE EVIDENCE FROM CHINA AND INDIA

This paper examines the relationship between rate of economic growth. inward foreign direct investment, and perceived level of corruption in China and India. It seems that corruption (in the form of bribe taking) in India is significantly higher than in ('hina and that does appear to have influenced its rate of economic growth adversely. With regard to foreign direct investment inflows, corruption is not a significant factor in either China or India. It is suggested that economic liberalization and attendant policies are driving growth in these two countries and foreign investors give greater weight to business opportunities, rather than prevalence of bribery, in deciding where to invest.