Researching the impact of corruption and organized crime on FDI in Europe: a literature review

Abstract

Eastern European societies and their economies have experienced specific and/or asymmetrical developments over the last 70 years. The political regime changes at the end of the 80s led these countries on the path of market economy and opened the doors for foreign investors’ presence, as privatizations of previously state-owned companies were considered beneficial for economic progress. Starting in the mid-90s and more so after the association of countries in the region to the European Union and NATO, foreign investors found interesting opportunities as greenfield projects or partnerships with local entities. However, the presence of foreign direct investments (FDI) in Eastern Europe was uneven across countries and regions, which may be due to a certain extent to corruption and organized crime groups. This paper aims to conduct a systematic review of the literature that has focused on analyzing the influence of corruption and organized crime in attracting foreign direct investment using quantitative methods, focusing on empirical studies conducted in Europe since 2000. Our main purpose is to summarize the different research approaches, to offer a discussion and suggestions for future research, and to provide some relevant and justified answers to the following question: To what extent are corruption, organized crime, and FDI analyzed in European countries? Keywords: foreign direct investments, organized crime, corruption, GDP, quantitative methods