The impact of crime on foreign direct investment
This study examines the impact of crime incidence on Foreign Direct Investment (FDI) in Indonesian provinces. This study uses panel data covering 31 provinces for the period 2005 to 2015. We involve Total Crime, Property Crime, Violence, Vandalism, Arson, Fraud, Homicides and Kidnapping as variable of crime. The results show that crime variables have significant impact on FDI. We find that for every increase in total crime incidence per 100,000 people by ten percent, FDI is expected to decrease by approximately 0.95 percent. The results of this study suggest that besides boosting economic growth, stimulating infrastructure development, and lowering the provincial minimum wages, government needs to pay attention to crime incidence in each province. Government should allocate adequate resources to minimize the crime rate.
Albanese, G., & Marinelli, G. (2013). Organized crime and productivity: Evidence from firm-level data. Rivista Italiana Degli Economisti, 18(3), 367â€“394. https://doi.org/10.1427/74922
Ashby, N. J., & Ramos, M. A. (2013). Foreign direct investment and industry response to organized crime: The Mexican case. European Journal of Political Economy, 30, 80â€“91. https://doi.org/10.1016/j.ejpoleco.2013.01.006
Brock, G. J. (1998). Foreign direct investment in Russiaâ€™s regions 1993â€95. Why so little and where has it gone? Economics of Transition, 6(4), 349â€“360. https://doi.org/10.1111/j.1468-0351.1998.tb00053.x
Constantinou, E. (2011). Has Foreign Direct Investment exhibited sensitiveness to crime across countries in the period 1999-2004? And if so, is this effect non-linear? Undergraduate Economic Review, 7(1), 1â€“31.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Economic Journal of Emerging Markets indexed in:
Economic Journal of Emerging Markets by http://journal.uii.ac.id/JEP/ is licensed under a Creative Commons Attribution 4.0 International License.