Political stability and economic determinants of FDI flow in Gulf Cooperation Council (GCC) economies

Purpose The impact of political stability and economic growth on foreign direct investment (FDI) is analysed using a quantitative regression approach in countries of the Gulf Cooperation Council (GCC). Design/methodology/approach The study used panel data covering the period 1995–2020, involving six GCC countries, and applied quantile panel estimates to determine the relationships between the variables employed in this study. Findings The findings indicate that trade openness is more dominant and has a positive influence on FDI inflows. Economic growth, financial stability and political stability have a detrimental effect on FDI flows for GCC countries. Furthermore, this research demonstrates that political stability has played a more significant role in FDI flows for GCC countries over the past thirty years. Originality/value The empirical findings of quantile estimates offer valuable insights for macroeconomic policymakers in aligning future FDI inflows to GCC countries with uncertainty of global economic conditions, trade barriers and political barriers. Inflows of inward FDI allow GCC countries to establish bilateral trade with expanding economic blocks and regions that engage in free trade and FDI inflows.