Risky Business : Political Instability and Greenfield Foreign Direct Investment in the Arab World
Which foreign direct investments are most affected by political instability? Analysis of quarterly greenfield investment flows into countries in the Middle East and North Africa from 2003 to 2012 shows that adverse political shocks are associated w...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/12/18621884/risky-business-political-instability-greenfield-foreign-direct-investment-arab-world http://hdl.handle.net/10986/16932 |
| Summary: | Which foreign direct investments are
most affected by political instability? Analysis of
quarterly greenfield investment flows into countries in the
Middle East and North Africa from 2003 to 2012 shows that
adverse political shocks are associated with significantly
reduced investment inflows in the non-resource tradable
sectors. By contrast, investments in natural resource
sectors and non-tradable activities appear insensitive to
such shocks. Consistent with these patterns, the significant
reduction in investment inflows in Arab Spring affected
economies was starkest in the non-resource manufacturing
sector. Political instability is thus associated with
increased reliance on non-tradables and aggravated resource
dependence. Conversely, how intensified political
instability affects aggregate foreign direct investment is
critically contingent on the initial sector composition of
these flows. |
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