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The Impact Of Country Risk Components On Algeria Attractiveness For Foreign Direct Investments (1990-2012)

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  • Midoun Sissani
  • Zairi Belkacem

Abstract

All business transactions involve some degree of risk. But, when business transactions occur across international borders, they carry additional risks called the country risk. The two main objectives of this paper are to explain and to examine the impact of Country risk (CR) subcategories including Political risk, Economic Risk, Financial risk on the attractiveness for foreign direct investments (FDI) towards Algeria during (1990 2012). Our second objective is to determine which component matters most for the attractiveness of FDI inflows. We used indices sourced (Data Sources) from the International Country Risk Guide (ICRG) and the multiple regression analysis revealed that R2 = 0.82 and just two components were statistically significant at 0.85 and 0.59 this means that Government stability, and absence of internal conflicts beside corruption and financial factors may have a high influence on the (FDI) inflow. Finally, the results suggest higher returns to investments are linked with the improvements in only two major components.

Suggested Citation

  • Midoun Sissani & Zairi Belkacem, 2014. "The Impact Of Country Risk Components On Algeria Attractiveness For Foreign Direct Investments (1990-2012)," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 14(1), pages 133-146.
    • Handle: RePEc:eaa:aeinde:v:14:y:2014:i:1_10
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    References listed on IDEAS

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    4. Timur Han Gur, 2001. "A Country Risk Assessment Model and the Asian Crisis," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 1(1), pages 49-68.
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