What question did this study set out to answer?

To investigate how foreign direct investment inflows across 41 countries are affected by geopolitical risks and institutional quality.

August 16, 2026Economic Papers A journal of applied economics and policyOpen Access

Do Geopolitical Risks and Institutional Quality Deter Foreign Direct Investment? Evidence from a Panel of 41 Countries

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Authors

SMSheikh MurtazaAligarh Muslim University MBMohd Nadeem BhatVellore Institute of Technology University WAWajahat AliFortis Hospital

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Implication

Panel data analysis reveals that geopolitical risk and inflation reduce foreign direct investment inflows across 41 countries, highlighting the need for macroeconomic stability.

Key Points

To investigate how foreign direct investment inflows across 41 countries are affected by geopolitical risks and institutional quality.
Analyzed a panel dataset of 41 developed and emerging economies spanning from 1995 to 2024.
Estimated parameters using a fixed-effects model with clustered robust standard errors following a Hausman specification test.
Geopolitical risk, inflation rates, and gross domestic product exert a negative effect on foreign direct investment inflows.
Institutional quality measured by Rule of Law is negatively associated with foreign direct investment inflows.
Market openness and population size have a statistically positive impact on attracting foreign direct investment.

Cite This Study

Murtaza et al. (2026) studied this question.

synapsesocial.com/papers/6a81799af2fb91fc834acc30 https://doi.org/10.1111/1759-3441.70015

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Implication

Panel data analysis reveals that geopolitical risk and inflation reduce foreign direct investment inflows across 41 countries, highlighting the need for macroeconomic stability.

Do Geopolitical Risks and Institutional Quality Deter Foreign Direct Investment? Evidence from a Panel of 41 Countries

Discussion

Member takes

Implication

Key Points

Cite This Study

Do Geopolitical Risks and Institutional Quality Deter Foreign Direct Investment? Evidence from a Panel of 41 Countries

Discussion

Member takes

Implication

Key Points

Cite This Study

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