Foreign Ownership of Firms and Corruption in Africa

The study finds the impact of the percentage of total annual sales of a firm paid as informal payments to public officials (bribes) on foreign ownership of firms in Africa while controlling for other variables outside the country of origin of investment.  The study used secondary data from the Worl...

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Main Author: Anselm Komla Abotsi
Format: Article
Language:English
Published: EconJournals 2015-07-01
Series:International Journal of Economics and Financial Issues
Online Access:https://econjournals.com/index.php/ijefi/article/view/1248
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author Anselm Komla Abotsi
author_facet Anselm Komla Abotsi
author_sort Anselm Komla Abotsi
collection DOAJ
description The study finds the impact of the percentage of total annual sales of a firm paid as informal payments to public officials (bribes) on foreign ownership of firms in Africa while controlling for other variables outside the country of origin of investment.  The study used secondary data from the World Business Environment Survey (WBES) conducted by the World Bank. In all 3,290 firms made up of the manufacturing, services and retail sectors are included in the analysis. The Tobit and probit estimation techniques were used. The results indicate that the percentage of total annual sales of the firm paid as informal payments to the public officials has a negative and highly significant impact on foreign ownership of firms in Africa.  African leaders should therefore institute policies to control corruption in order to boost foreign investors' confidence in their economies.  Keywords:  foreign ownership of firm; informal payments; corruption; institutions; foreign investors  JEL Classifications:   F21; F23; F32
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spelling doaj.art-3a98dbae5bcc49dca818602d6756fac62023-02-15T16:11:52ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382015-07-0153Foreign Ownership of Firms and Corruption in AfricaAnselm Komla Abotsi01. School of Development Economics, National Institute of Development Administration, Thailand 2. Department of Economics, University of Education, Winneba The study finds the impact of the percentage of total annual sales of a firm paid as informal payments to public officials (bribes) on foreign ownership of firms in Africa while controlling for other variables outside the country of origin of investment.  The study used secondary data from the World Business Environment Survey (WBES) conducted by the World Bank. In all 3,290 firms made up of the manufacturing, services and retail sectors are included in the analysis. The Tobit and probit estimation techniques were used. The results indicate that the percentage of total annual sales of the firm paid as informal payments to the public officials has a negative and highly significant impact on foreign ownership of firms in Africa.  African leaders should therefore institute policies to control corruption in order to boost foreign investors' confidence in their economies.  Keywords:  foreign ownership of firm; informal payments; corruption; institutions; foreign investors  JEL Classifications:   F21; F23; F32 https://econjournals.com/index.php/ijefi/article/view/1248
spellingShingle Anselm Komla Abotsi
Foreign Ownership of Firms and Corruption in Africa
International Journal of Economics and Financial Issues
title Foreign Ownership of Firms and Corruption in Africa
title_full Foreign Ownership of Firms and Corruption in Africa
title_fullStr Foreign Ownership of Firms and Corruption in Africa
title_full_unstemmed Foreign Ownership of Firms and Corruption in Africa
title_short Foreign Ownership of Firms and Corruption in Africa
title_sort foreign ownership of firms and corruption in africa
url https://econjournals.com/index.php/ijefi/article/view/1248
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