THE NEXUS BETWEEN UNCERTAINTY AND FOREIGN DIRECT INVESTMENT FLOWS TO G20 MEMBER COUNTRIES
EKONOMSKI PREGLED, vol.73, no.5, pp.717-738, 2022 (ESCI, Scopus)
- Publication Type: Article / Article
- Volume: 73 Issue: 5
- Publication Date: 2022
- Doi Number: 10.32910/ep.73.5.3
- Journal Name: EKONOMSKI PREGLED
- Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus, International Bibliography of Social Sciences, EconLit, Historical Abstracts
- Page Numbers: pp.717-738
- Ondokuz Mayıs University Affiliated: No
Abstract
The main objective of this study is to examine the link between global economic, political, and geopolitical uncertainties and FDI flows to G20 member countries over the 1996-2018 period. Unlike most of the previo- us studies, this study employs reasonable uncertainty indexes, namely, the Economic Policy Uncertainty (EPU) index, the World Uncertainty Index (WUI) for economic/political uncertainty rather than the volatility or elec- tion indicators. The study also uses the Geopolitical Risk index as a proxy for geopolitical uncertainty, and thereby it not only focuses on economic/ political uncertainty but also considers the geopolitical uncertainty to pro- vide a more comprehensive picture of uncertainty. Findings obtained from the panel data analysis indicate that heightened uncertainty in the global economic/political and geopolitical environment deters FDI flows to G20 member countries. It is also found that there is a unilateral causality running from uncertainty to FDI inflows. Considering these empirical findings, po- licymakers in G20 economies should provide a stable economic/political and geopolitical environment to attach FDI inflows, which have a key role in stimulating economic growth and development.