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Impact of Political Instability on Foreign Direct Investment in Lebanon

Author

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  • Nicholas Bitar
  • Mohamad Hamadeh
  • Roy Khoueiri

Abstract

Foreign direct investment (FDI) is an important determinant of economic growth. A wealth of literature has tackled its determinants; however few investigated the effect of political risk on FDI. Consequently, this study examines 12 ICRG political risk indicators, after removing multicollinearity and grouping them into three categories, to test the nature of this relation in the case of Lebanon over the period 2008-2018. The findings provide evidence of significant causality between all political risk factors and FDI inflows. Other determinants like “Infrastructure”, “Inflation”, “Trade Openness” and “Wage Rates” have insignificant effects.

Suggested Citation

  • Nicholas Bitar & Mohamad Hamadeh & Roy Khoueiri, 2020. "Impact of Political Instability on Foreign Direct Investment in Lebanon," Asian Social Science, Canadian Center of Science and Education, vol. 16(1), pages 1-41, January.
    • Handle: RePEc:ibn:assjnl:v:16:y:2019:i:1:p:41
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    References listed on IDEAS

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    2. Khalid Sekkat & Marie‐Ange Veganzones‐Varoudakis, 2007. "Openness, Investment Climate, and FDI in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 11(4), pages 607-620, November.
    3. Nazeer, Abdul Malik & Masih, Mansur, 2017. "Impact of political instability on foreign direct investment and Economic Growth: Evidence from Malaysia," MPRA Paper 79418, University Library of Munich, Germany.
    4. Arjen H L Slangen & Sjoerd Beugelsdijk, 2010. "The impact of institutional hazards on foreign multinational activity: A contingency perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(6), pages 980-995, August.
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    Cited by:

    1. Adewale Samuel Hassan, 2022. "Does Country Risk Influence Foreign Direct Investment Inflows? A Case of the Visegrád Four," Economies, MDPI, vol. 10(9), pages 1-22, September.

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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