Foreign Direct Investment in the MENA Region: Factors that Hinder or Favour investments

Abstract

A striking feature of the new globalization process is the role played by multinational enterprises (MNEs) in generating employment, growth, productivity gains, technology transfers and in opening a gateway to a better integration in global value chains (Harrison, 1994; Del Prete et al., 2018). Attracting foreign direct investment (FDI), therefore, is placed at the top of the agenda for most countries. From the investors' perspective, political risks is, after macroeconomic instability, the factor that poses the greatest constraint on investments in developing countries (MIGA, 2014). Within political risks, ad-verse regulatory changes and breach of contract are the troubles that investors fear the most. This issue has been exacerbated by the Arab Spring, as it brought a surge of political instability and violence in the Middle East and North Africa (MENA) region. This article builds on the limited research which fo-cuses on this region and on our own study (Carril-Caccia et al., 2018). We delve further into MENA re-gion capacity to attract FDI, highlighting the role played by institutions and violence. ; Economía