Powered by OpenAIRE graph
Found an issue? Give us feedback
image/svg+xml art designer at PLoS, modified by Wikipedia users Nina, Beao, JakobVoss, and AnonMoos Open Access logo, converted into svg, designed by PLoS. This version with transparent background. http://commons.wikimedia.org/wiki/File:Open_Access_logo_PLoS_white.svg art designer at PLoS, modified by Wikipedia users Nina, Beao, JakobVoss, and AnonMoos http://www.plos.org/ International Journa...arrow_drop_down
image/svg+xml art designer at PLoS, modified by Wikipedia users Nina, Beao, JakobVoss, and AnonMoos Open Access logo, converted into svg, designed by PLoS. This version with transparent background. http://commons.wikimedia.org/wiki/File:Open_Access_logo_PLoS_white.svg art designer at PLoS, modified by Wikipedia users Nina, Beao, JakobVoss, and AnonMoos http://www.plos.org/
International Journal of Developing Country Studies
Article . 2024 . Peer-reviewed
License: CC BY
Data sources: Crossref
addClaim

The Influence of Political Stability on Foreign Direct Investment (FDI)

Authors: Jansen Kiptoo;

The Influence of Political Stability on Foreign Direct Investment (FDI)

Abstract

Purpose: The general objective of the study was to explore the influence of political instability on Foreign Direct Investment (FDI). Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library. Findings: The findings reveal that there exists a contextual and methodological gap relating to the influence of political instability on Foreign Direct Investment (FDI). Preliminary empirical review revealed that political stability was crucial in attracting Foreign Direct Investment (FDI) by providing a predictable and secure environment, reducing risks associated with political unrest and policy changes. Stable political environments ensured the protection of property rights, contract enforcement, and consistent application of laws, which boosted investor confidence. Conversely, political instability, characterized by government changes and civil unrest, deterred FDI by creating an unpredictable business climate. The findings highlighted the importance of political stability for economic development, suggesting that countries prioritizing stable governance and robust institutions were more successful in attracting and retaining foreign investments. Unique Contribution to Theory, Practice and Policy: The Institutional Theory, The Eclectic Paradigm (OLI Framework) and the Political Risk Theory may be used to anchor future studies on political instability on Foreign Direct Investment (FDI). The study recommended that countries strengthen their political institutions and legal frameworks to ensure stability and predictability, thereby attracting more FDI. Enhancing institutional quality, combating corruption, and improving the rule of law were deemed essential for creating a stable investment climate. Practically, governments were advised to communicate effectively with investors, offer incentives, and address political risks through dialogue. Policy-wise, comprehensive reforms to promote stable governance, transparency, and conflict resolution were suggested. Additionally, regional and international cooperation was encouraged to share best practices and support political stability, ultimately fostering a more favorable environment for foreign investment and sustainable economic growth.

Related Organizations
  • BIP!
    Impact byBIP!
    selected citations
    These citations are derived from selected sources.
    This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    7
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Top 10%
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Average
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
    Top 10%
Powered by OpenAIRE graph
Found an issue? Give us feedback
selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
7
Top 10%
Average
Top 10%
gold