Many researchers have studied the effect of
corruption on Foreign Direct Investment (FDI) and majority of them have come to
the conclusion that higher levels corruption in a country deter FDI. This paper
is a case-based comparative study of the effect of corruption on FDI in China
and India. Corruption in India has negatively affected FDI, whereas that is not
true in China. This study finds that while corruption does affect FDI inflows
into a country, the effect also depends on nature of corruption and not only on
size of corruption.