Does Political Stability Matter for Foreign Direct Investment in Eurasian countries? Examining the Role of the Business Environment and Macroeconomic Variables

Abstract

This In recent years, developing countries have placed a strong emphasis on attracting foreign direct investment (FDI), which is ostensibly regarded as the most important external resource for increasing industrial activity and real income growth. Indeed, the subsequent benefits of FDI, one of which is increased economic growth in developing countries, have been widely acknowledged. As a result, the goal of this study was to look into the impact of foreign macroeconomic factors, political instability, and the business environment on foreign direct investment in Eurasia countries. Many developing countries have softened their stances on foreign direct investment (FDI) in the hopes of luring more of this kind of investment and thereby bolstering their economies. This is due to the fact that there are many benefits to utilizing foreign capital during the expansion process. The panel data method was used to analyse information gathered from ten different Eurasia countries over a twenty-six-year period, from 1996 to 2021. The study's findings support the predicted outcomes of the hypothesized research. This study is one of the few in Eurasia countries that can be considered a pioneering study on the subject. This study will help policymakers and researchers understand the relationship between macroeconomic risk, political instability, the business environment, and foreign direct investment.