The econometric analysis of the relationship between perceived corruption, foreign trade and foreign direct investment in the context of international indices

The concept of corruption which was initially dealt with only from political and bureaucratical perspective has spread to other structures in time. With the spread of corruption in many areas the possibility of involving or facing corruption of business, investors and even citizens in society has emerged. Corruption has caused economic problems in countries over time due to this spread. It is seen that corruption affects economic structures as well as economic structures affect corruption. In this context, economic development and progres are also considered as an opportunity to prevent corruption. The aim of this study is to reveal the transformation of corruption into an economic problem in the historical process and the effects of international economic relations (foreign trade and foreign direct investment) on corruption This research which approach the relationship between corruption and international economic factors consists of three parts. In the first part of the study, the concept of corruption, its causes, types and measures and additionally anti-corruption initiatives are discussed. In the second part, macro variables affected by corruption and the literature review of studies on the relationship between corruption and foreign trade and foreign direct investment is presented. In the last part, including the analysis, the relationship between perceived corruption, measured by ICRG and CPI indices, and foreign trade and foreign direct investment is evaluated. Within the scope of analysis, the countries are evaluated in four basic categories according to 2017 income classification of the World Bank. Because of the problem of time and data pairing, the corruption indices have been analyzed with two different models generated over different time periods (ICRG 1995-2015 / CPI 2003-2015). As a result of the analysis; the models which are established for both ICRG and CPI indices are found significant. In order to assess the impact of the customs duties ICRG and CPI models for the 60 countries that aren't categorized in 2003-2015 periods have significant results. In both models, it is seen that increase in exports decreased the corruption while increase in customs duties rates increase the corruption. Unlike previous studies, using the corruption variable, which is the sub-index of the ICRG index, evaluating countries with income categories, and using panel data analysis are unique aspects of this study.