Foreign investment and bribery: A firm-level analysis of corruption in Vietnam

► Through an experimental strategy we test the linkage between FDI and corruption on a representative sample of 7300 domestic and 1155 foreign firms in Vietnam. ► We find evidence of corruption during both registration and procurement; corruption rates, however, are not associated with FDI inflows. ► In general, 22.8% of operations in Vietnam bribe during registration, and 34.6% bribe when bidding for government contracts. ► The bilateral trade liberalization agreement between Vietnam and the United States (US-BTA), significantly reduced bribery during business registration.