Risk Instability and the Pattern of Foreign Direct Investment in the Middle East and North Africa Region

Publication Date:

August 1, 2004

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper demonstrates that instability associated with investment risk is critical in explaining the level of foreign direct investment for the Middle East and North Africa (MENA) countries, which generally have higher investment risk than developed countries. The empirical results support this hypothesis, whether either the standard deviation or the interquartile range is used as a measure of instability, in a dynamic panel model. The paper recommends a reorientation of policies toward those with a longer-term focus in order to help lower the degree of risk instability for MENA countries.

Series:

Working Paper No. 2004/139

Subject:

Capital account Capital flows Emerging and frontier financial markets Foreign direct investment

English

Publication Date:

August 1, 2004

ISBN/ISSN:

9781451856071/1018-5941

Stock No:

WPIEA1392004

Pages:

19

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