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The Impact of Geopolitical Conflicts on Foreign Direct Investment (FDI) in the Middle East and Africa

Foreign Direct Investment (FDI) is a critical driver of economic development in the Middle East and Africa (MEA), contributing to infrastructure development, technology transfer, and job creation. However, the persistent geopolitical conflicts and instability in these regions create a complex environment that significantly influences FDI inflows. This paper investigates the impact of geopolitical conflicts on FDI in the Middle East and Africa from 2000 to 2022, using panel data analysis and a gravity model approach. The study finds that geopolitical instability negatively affects FDI inflows, although the magnitude varies by country and sector. Furthermore, institutional quality, governance, and regional integration efforts moderate this relationship. The paper concludes with policy recommendations to mitigate risks and attract more stable and sustainable FDI.