Do Corruption and Trade Openness Impede FDI

Foreign direct investment (FDI) has been given much attentionin the recent past just because of its contribution to economicdevelopment. However, there are several socio-economicfactors that impede FDI. Therefore, the objective of currentstudy is to probe whether corruption and trade openness affectFDI. The study uses data from 1990-2015 for SAARC countriesand employs panel ARDL model to retrieve short- and long-runresults. The findings reveal that corruption plunges the FDI inlong-run, while trade openness increases FDI. On the contrary,we report heterogeneous results in short-run. Additionally, wededuce a few policy implications based on the findings of thisstudy.