Does political risk affect foreign direct investment inflows?: Empirical evidence from selected mena economies

• Abdelkader Nassour ^[2] ; Saliha Meftah ^[2] ; Sajid Hussain Mirani ^[1]
  1. [1] Shah Abdul Latif University

     Shah Abdul Latif University

     Pakistán

     
  2. [2] University of Sidi Bel Abbes, Algeria
• Localización: Estudios de economía aplicada, ISSN 1133-3197, ISSN-e 1697-5731, Vol. 38, Nº 3, 2020 (Ejemplar dedicado a: Africa: Economic transformations and development challenges (II))
• Idioma: inglés
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• Resumen

  • The current political uncertainty, economic problems, permanent religious conflicts, and crisis continue to frustrate investors and hold back potential stabilization. This paper investigates the impact of Political risk on Foreign Direct Investment inflows in three selected MENA countries (Algeria Turkey and Arabia-Saudi) during the period (1984-2017) using the Panel Data model. The Hausman Test confirms that the random effects model is a more appropriate technique for this model to explain the effect of Political Risk on FDI inflows. The results of our study show that: Democratic Accountability and Investment Profile, Law Order have a significant positive impact on FDI inflow. Besides that, another interesting finding of the research is the significant negative relationship between the Military in Politics and FDI. These results are important for policymakers to implement a strategy that would ensure the reduction of the level of political instability related by the indicators of the Corruption and the Military in Politics, in the aim to increase the inflows of FDI in these three selected countries of MENA. Furthermore, the results give a more comprehensive picture for the foreign investors that these selected countries of MENA can be the best host for their investments