An acronym for the Middle East and North Africa region, an extensive region extending from Morocco in Northwest Africa to Iran in Southwest Asia. It generally includes all the Arab Middle East and North Africa countries, as well as Cyprus, Iran, Israel, and Turkey.
Published in Chapter:
Effects of Economic and Political Risks on Foreign Direct Investment: A Panel Data Analysis in MENA Region
Souhaila Kammoun (IHEC, CODECI, University of Sfax, Tunisia), Youssra Ben Romdhane (University of Sfax, Tunisia), and Marwa Ben Salem Fakhfakh (University of Sfax, Tunisia)
Copyright: © 2020
|Pages: 15
DOI: 10.4018/978-1-7998-1730-7.ch012
Abstract
The chapter identifies the main determinants of FDI and the factors that constitute the main obstacles to foreign investment attractiveness in a region affected by economic and political instability and even conflict and where investors may face a multitude of political, economic, and security risks. The sample includes 14 Arab countries over the period of 2003-2017. To determine the factors that explain the probability of attracting investment inflows in MENA countries, the study uses a multiple regression model to estimate data in a time series. The authors also use the World Bank's governance indicators to assess the quality of the Arab institutional framework. The results of the panel data estimates through three different regressions reveal that macroeconomic instability combined with political instability constitutes an obstacle to investment. On practical implications, the study suggests that, in general, economic managers should take some economic policy measures to reduce or mitigate risks to encourage foreign investors to invest in MENA countries.