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The Importance of Geopolitical Risk and Institutional Quality Indicators on Foreign Direct Investment to BRICS Countries

Author

Listed:
  • Mumin Atalay CETİN

    (Aksaray University, Aksaray, Turkey.)

  • Ilker YAMAN

    (Recep Tayyip Erdoğan University, Rize, Turkey.)

Abstract

Increasing geopolitical risks and deteriorated institutional quality could be an important obstacle on economic development, especially for developing countries. This study is aimed to examine the long run impacts of geopolitical risk and institutional quality indicators on Foreign Direct Investments (FDI) in BRICS countries during 1992-2019 with using dynamic panel data estimators. According to the findings, increasing geopolitical risk has a significant and negative impact on FDI inflows while improvements in rule of law and equal distribution of resources have significant and positive impacts on FDI inflows. Besides, long run elasticity findings revealed that developments in institutional quality have a relatively a strong impact on FDI compared with the adverse impact of increasing geopolitical risks.

Suggested Citation

  • Mumin Atalay CETİN & Ilker YAMAN, 2023. "The Importance of Geopolitical Risk and Institutional Quality Indicators on Foreign Direct Investment to BRICS Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 107-127, December.
    • Handle: RePEc:rjr:romjef:v::y:2023:i:4:p:107-127
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    More about this item

    Keywords

    Geopoliticak risk; Rule of law; Equal distribution of resources; FDI; BRICS;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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