Replication Data for Chapter 2: Corruption Experience and Foreign Investments

Nonetheless, multinationals may still want to invest to benefit from local business opportunities. To deal with the challenges of operating in a corrupt host country, they can use experience gained in other corrupt countries.

I distinguish between “clean hands” and “dirty hands” learning about corruption – that is to say, learning how to avoid bribing, or learning how to pay bribes and avoid traceability. I disentangle these two competing mechanisms, which were confounded in previous studies, by assessing how home country enforcement of laws against bribery abroad modifies how prior experience in corrupt countries mitigates the discouraging effect of host country corruption on investment.