Risk Instability and the Pattern of Foreign Direct Investment in the Middle East and North Africa Region
August 1, 2004
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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.
Subject: Capital account, Capital flows, Emerging and frontier financial markets, Foreign direct investment
Keywords: economic index, financial risk, WP
Pages:
19
Volume:
2004
DOI:
Issue:
139
Series:
Working Paper No. 2004/139
Stock No:
WPIEA1392004
ISBN:
9781451856071
ISSN:
1018-5941
