Risks and foreign direct investment inflows: evidence from Yemen
This study aims to find the relationship between the political, exchange rate and inflation risk factors with the yearly foreign direct investment (YFDI) in Yemen, over the period between 1990 to 2010. Secondary data results showed that political risk and exchange rate risk have an inverse relatio...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2016
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| Online Access: | http://journalarticle.ukm.my/10800/1/8932-43006-1-PB.pdf http://journalarticle.ukm.my/10800/ http://ejournal.ukm.my/pengurusan/issue/view/805 |
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| Institution: | Universiti Kebangsaan Malaysia |
| Language: | English |
| Summary: | This study aims to find the relationship between the political, exchange rate and inflation risk factors with the yearly
foreign direct investment (YFDI) in Yemen, over the period between 1990 to 2010. Secondary data results showed
that political risk and exchange rate risk have an inverse relationship with YFDI, while inflation risk has a significant
positive relationship. Further analysis on a survey collected from 62 multinational enterprises (MNEs) operating in
Yemen showed an insignificant relationship between the perceived political, exchange rate and inflation risk factors
and corporate foreign direct investment (CFDI). The conflicting results possibly imply that the MNEs’ subsequent capital
investments may not be affected by the perceived political, exchange rate and inflation risks that would nonetheless
have been considered during the initial business plan. It is likely that MNEs that were already operating in Yemen may
have developed capabilities in terms of knowledge, bargaining and lobbying skills. Therefore, perceived risks are no
longer seem to influence their investment decisions. |
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