Macroeconomic Vulnerability and Investment Risks in the Middle East and North Africa Region

Baidyanath N. Ghosh () and Eric A.L. Li ()
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Baidyanath N. Ghosh: Eastern Mediterranean University, Postal: Famagusta T.R. North Cyprus via Mersin 10, Turkey, http://web2009.emu.edu.tr/
Eric A.L. Li: Eastern Mediterranean University, Postal: Famagusta T.R. North Cyprus via Mersin 10, Turkey, http://web2009.emu.edu.tr/

Economia Internazionale / International Economics, 2009, vol. 62, issue 1, 1-39

Abstract: In this paper we assess a country’s investment risk by studying its vulnerability to shocks in macroeconomic variables including GDP growth, infl ation, and unemployment. Based on the criteria of quick stabilization in the impulse responses of the macro variables after a one standard deviation shock, we rank a sample of ten MENA countries as follows: Algeria (least risky), Syria, Malta, Israel, Saudi Arabia, Tunisia, Oman, Jordan, United Arab Emirates and Bahrain (most risky). We conclude that a country’s economic policy appears to be more important than its oil reserves in stabilizing its economy and attracting FDI in the MENA region.

Keywords: Vulnerability; Investment Risk; Impulse Response; Macroeconomic Shock (search for similar items in EconPapers)
JEL-codes: C32 E22 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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