Corruption as a Moderator in the Relationship between E-Government and Inward Foreign Direct Investment

Abstract

E-government initiatives help a country to publicize information with greater transparency and efficiency and are expected to reduce corruption in the country. The present study investigates the impact of a host country’s e-government system on inward foreign direct investment (FDI) which plays an important role in the sustainable growth of countries. Using a logistic regression method to model whether the inward FDI is positive or negative, this study provides empirical evidence on the effects of the e-government development level on inward FDI. In addition, the authors point out that the positive influence of e-government on FDI becomes greater when the target country is more corrupted, and they hypothesize that the impact of e-government is moderated by corruption. The estimation results show that the e-government effect becomes greater when the host country is more corrupted. The findings have practical implications for policymakers for sustainable development of their economies on how they can attract more FDI by controlling the market environment.