Monopoly Money: Foreign Investment and Bribery in Vietnam, a Survey Experiment

Edmund J. Malesky, Dimitar D. Gueorguiev, Nathan M. Jensen

Research output: Contribution to journalArticle

29 Scopus citations

Abstract

Prevailing work argues that foreign investment reduces corruption, either by competing down monopoly rents or diffusing best practices of corporate governance. We argue that the mechanisms generating this relationship are not clear because the extant empirical work is too heavily drawn from aggregations of total foreign investment entering an economy. Alternatively, we suggest that openness to foreign investment has differential effects on corruption even within the same country and under the same domestic institutions over time. We argue that foreign firms use bribes to enter protected industries in search of rents, and therefore we expect variation in bribe propensity across sectors according to expected profitability. We test this effect using a list experiment embedded in three waves of a nationally representative survey of 20,000 foreign and domestic businesses in Vietnam, finding that the effect of economic openness on the probability to engage in bribes is conditional on policies that restrict investment.

Original languageEnglish (US)
Pages (from-to)419-439
Number of pages21
JournalAmerican Journal of Political Science
Volume59
Issue number2
DOIs
StatePublished - Apr 1 2015
Externally publishedYes

ASJC Scopus subject areas

  • Sociology and Political Science
  • Political Science and International Relations

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