FDI is beneficial for the growth of the respective country’s economy, but corruption plays a negative role in the economic development of the nations. The factors which influence the investment decision are the different type of crime at a different level. The main reason for corruption is the political aspect like the less importance to FDI investors regarding business activities growth and economic corruption, like bribery, which harms the performance of the FDI. These corruptions have a negative impact on the investors’ view, which affects the business activities of foreign companies. Crime is the central component found in the public offices, and it attains the private gains and the business goals.
Based on the data, it is seen that Switzerland and Norway maintain the average CPI index number, which is the corruption level of this country. It can be said that the corruption level of these countries is very high, based on the CPI index. Moreover, the United Kingdom has fair value frank in the CPI index. This country has the lowest spot of the between the three chosen countries of this index. However, the developing counties’ corruption level is much high compared to the developed countries according to the CPI index. Based on the GDP figure, the developed countries have high GDP growth. Besides, China has a high variance of GDP among all the chose countries due to the exponential growth of China’s GDP in recent times due to FDI investment. The GDP growth of India and Bangladesh is deficient due to the high corruption rate. According to the table of openness, it is seen that Switzerland has the highest level of transparency among the six chosen countries. Besides, the highest variance of the transparency of the economy is India based on the table, and the lowest vulnerability is seen in Bangladesh. Corruption can negatively affect the exchange rate of the currency in the economy of the respective countries. According to the exchange rate table, the highest variance of the currency exchange rate is China due to the increased investment of FDI among all the three developing countries.
In contrast, the highest variance of the exchange currency in Switzerland among all the three developed countries. The developing countries have a much higher rate compare to the developed counties. Thus the corruption can negatively affect the currency exchange rate of the nations. Based on the data, it can be said the corruption ha many negative impacts on the FDI of the developing countries as well as the developed countries. Besides, the corruption rate is much high in developed countries. Thus these countries face GDP growth, exchange rate, economic openness, and other beneficial aspects.
According to the literature review of this study, the crime is the active corruption which includes the bribery. Several factors affect the decision-making process, such as corruption. The country’s GDP is the dynamic variable that influences the change of the decision-making process of the FDI. It has a negative relationship between the regulations of the market with the lower competition of the market. These rules create the corruption situation of developing countries like India, Bangladesh, and China. Corruption can increase the FDI cost, which leads to a bribery situation where companies need to pay bribery. Corrosion can lead to the extra, which does not come under the countries’ rules and regulations. Thus it increases the cost of the FDI.
Moreover, the crime affects the business MNC’s while dealing with the corrupted officials of the country. It can increase the uncertainty of the business of foreign companies. Increasing payment can affect the rules of the respected countries, which badly affects the economy, and corruption affects the investment of the FDI along with the incentives of the local government. The infliction in the payment cost can influence the lawsuit of the countries badly. The counties with high corruption levels have significant corruption scandals that affect the managers and the other stakeholders, and it can badly impact the entire organization. It creates risk as well.
The government officials have received bribes from the companies that allow the increasing cost of the public services and the FDI return. The corrupt government has a higher risk, which affects FDI. The corrupt government can introduce many barriers to the business, causing various issues of the FDI. Corruption impacts the economy, and it leads to financial loss, damaged opportunities, and creating risk. Crime is the use of resources of the public offices for personal gain. The misuse of the private and the general office affects business performance. Corruption can increase the foreign business’s cost due to bribes payment, resource wasting, inefficient business activities, and additional contract-related risk. However, crime can decrease the profit margin and the incentives of the host countries. It reduces the performance, productivity, and the attractiveness of the country. Besides, foreign countries need to pay bribes to government officials to increase the government process’s speed. It can be said that corruption has a beneficial aspect for companies that increase foreign companies’ productivity. The growth of the FDI is for the long-term, but the corruption decreases the process. It is seen that the foreign companies are indented to invest in low-cost countries for more efficiency and effectiveness. This risk associated with the companies’crimeis the illegal emulation of innovation to pay the bribes to the government and public officials. Corruption of the countries can encourage the ongoing operations of the FDI. Besides, foreign companies are invested in the states due to gain market share and reduce operating costs. The main reason for the investment is the employees’ lower salaries, minimal tax rate, lower material cost, and other factors. Direct investment can affect the economic development of the host countries. The willingness makes sure the long-term relationship between the investors of FDI and the business’s management. The corruption is much more costly for foreign companies than the tax amount due to its illegal, and it requires the secrecy. Corruption can badly affect the economic performance of the host country. Bribery causes many serious problems compared to taxation in terms of dishonesty. Effective allocation of resources is not transparent, and it involves much poor enforcement between the parties.
According to the above discussion, it can be said the corruption has many problems for the FDI, although it has some beneficial aspects for foreign companies. It increases the speed of government paper works. Besides, it increases the cost of public services, which is fruitful for the companies and the host countries. It can improve the uncertainty of business and operation costs. It enhances the financial loss of the companies and increases the risk of business operations. Therefore corruption can become effective negatively to the FDI for the host countries as well as for foreign countries.