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The Incidence of Crime on Industry‐Level Foreign Direct Investment: An Assessment of OECD Member Countries *
Author(s) -
Brown Leanora,
Hibbert Keva
Publication year - 2019
Publication title -
social science quarterly
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.482
H-Index - 90
eISSN - 1540-6237
pISSN - 0038-4941
DOI - 10.1111/ssqu.12624
Subject(s) - endogeneity , foreign direct investment , tertiary sector of the economy , estimation , investment (military) , generalized method of moments , economics , demographic economics , panel data , business , public economics , international economics , macroeconomics , econometrics , political science , economy , management , politics , law
In this article, we assess whether the incidence of crime helps to explain the variation in sectoral FDI flows. Using a panel of 29 Organization of Economic Co‐operation and Development (OECD) countries for the period 2003–2012, we employ a generalized method of moments (GMM) estimation strategy due to the potential for endogeneity between our variables of interest. Our results indicate that crime deters investment to the service sector. In particular, this effect is observed in the following service industry subsector: financial services. Policymakers interested in boosting FDI in the affected sectors should be concerned with policies that focus on the reduction of criminal activities.