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

Martijn Burger, Elena Ianchovichina and Bob Rijkers

The World Bank Economic Review, 2016, vol. 30, issue 2, 306-331

Abstract: 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.

Date: 2016
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Working Paper: Risky Business: Political Instability and Sectoral Greenfield Foreign Direct Investment in the Arab World (2015)
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