The asymmetric impact of economic policy uncertainty, trade and geopolitical risk on firm-level investment in BRICS countries fresh insights from multiple thresholds NARDL approach

Mezouri Ettayib (), Medjaoui-Hocine Trari () and Yassine Mimouni ()
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Mezouri Ettayib: University of Relizane
Medjaoui-Hocine Trari: University of Oran2 Mohamed Ben Ahmed
Yassine Mimouni: University of Relizane

SN Business & Economics, 2025, vol. 5, issue 10, 1-34

Abstract: Abstract The purpose of this research is to examine the asymmetric effects of trade, geopolitical risk, trade and economic policy uncertainty on firm-level investment in the BRICS Regions from 2010Q1 to 2023Q3. We used the Multiple Threshold ARDL model (MTNARDL). According to this study, suggests that consistent application and open communication of economic policies are likely to boost the efficacy of firm-level investment with rising economic and geopolitical risk and uncertainty. This will lead to more efficient resource allocation and corporate decision-making. This study adds value by examining the asymmetrical relationships between economic policy uncertainty and geopolitical risk on firm investment decisions in the five BRICS nations (Brazil, China, India, Russia, and South Africa). These relationships have not been extensively studied in prior research, particularly when it comes to trade and investment in the wake of global crises, where geographic risks and economic uncertainty are amplified. In the same context, the effect of extremely small and large changes in economic policy uncertainty and asymmetric impact of economic policy uncertainty, trade and geopolitical risk on BRICS Region’s firm-level investment, which is a novelty in economic policy uncertainty, trade and geopolitical risk and firm-level investment. Furthermore, hence, the objective of this study is well defined in addressing the impact of economic policy uncertainty on firms’ investment decisions under geopolitical risk and trade and interaction between economic policy uncertainty, trade and geopolitical risk impact trade and firm investment and this study confirms that uncertainty in measured dimensions can delay corporate investments, and proposes a dynamic model for predicting firm responses, aiding market analysts and policymakers in decision-making.

Keywords: Economic policy uncertainty; Trade; Geopolitical risk; Firm-level investment; BRICS regions; NARDL and MTNARDL models (search for similar items in EconPapers)
JEL-codes: F43 O11 O40 Q43 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00902-y

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