- Sunday, September 2, 2007
- The Contagion “Disease” that Affects Foreign Direct Investment in the MENA Countries
- Published at:Journal of Business and Economics
This paper aims to analyze the dynamic relationship between foreign direct investment FDI and different kinds of risks in the MENA countries. Using the vector autoregressive technique on the country level for eleven MENA countries during the period of 1980-2003, the findings indicate that despite the fact that, the macroeconomic performance and the political (in) stability are important issues in affecting the decision of FDI and determining its location; however, the cultural environment, particularly corruption level, is also having its special effects on this theme in the MENA countries.
These results should attract the attention of policymakers; since they reveal that: it is neither the economical risk nor the political risks that mostly perform threats and shy away FDI from the MENA countries (as usually point to), but it is a contagion “disease” that is called the cultural risk.