The Effects of Corruption on Indian Incoming FDI

This paper examines the ways in which corruption inIndia has influenced the investment decisions of MNCsoperating or planning to operate in the country. Itfocuses not only on the direct channels through whichcorruption discourages FDI, but also on the indirectones, by analyzing the corruption-infrastructure-FDIand the corruption-human capital-FDI nexus inparticular. The paper finds out that both the directcosts and the indirect influence throughinfrastructure discourage FDI greatly. Whilecorruption affects human capital substantially, thisis not a major obstacle to FDI.