The Relevance of Political Stability on FDI: A VAR Analysis and ARDL Models for Selected Small, Developed, and Instability Threatened Economies

  • Petar Kurecic, Filip Kokotovic
  • Economies, June 2017, MDPI AG
  • DOI: 10.3390/economies5030022

The Relevance of Political Stability on FDI

What is it about?

This paper studies the relevance of political stability on foreign direct investment (FDI) and the relevance of FDI on economic growth, in three panels. The first panel contains 11 very small economies; the second contains five well-developed and politically stable economies with highly positive FDI net inflows, while the third is a panel with economies that are prone to political violence or targeted by the terrorist attacks.

Why is it important?

Foreign direct investment (FDI) is considered an important motivator of economic growth. There are various studies that address the issue of the relevance of FDI to economic growth, comprising numerous other macroeconomic variables. As such, this study aims to fill the literature gap in understanding the psychological factor of macroeconomic dynamics as becoming increasingly important in determining the key components of economic growth.


Professor Petar Kurecic
University of the North Croatia

The paper will provide a theoretical discussion and summary of the results obtained from the empiric approach. Finally, the paper will provide relevant policy recommendations based upon the results.

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The following have contributed to this page: Professor Petar Kurecic