Journal Article

Risky Business: Political Instability and Sectoral Greenfield Foreign Direct Investment in the Arab World

Martijn Burger, Elena Ianchovichina and Bob Rijkers

in The World Bank Economic Review

Volume 30, issue 2, pages 306-331
Published in print January 2016 | ISSN: 0258-6770
Published online June 2015 | e-ISSN: 1564-698X | DOI: https://dx.doi.org/10.1093/wber/lhv030
Risky Business: Political Instability and Sectoral Greenfield Foreign Direct Investment in the Arab World

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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 during the period 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. Political instability is thus associated with increased reliance on non-tradables and aggravated resource dependence.

Keywords: F21; F23; O13; O16; P48

Journal Article.  10160 words.  Illustrated.

Subjects: International Factor Movements and International Business ; Economic Development ; Other Economic Systems

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