The Economic Opportunity Cost for the Arab Spring Countries

Abstract

This article examines the effect of political instability on countries caught in such a situation and also by their location. Using an interrupted time series model and an unrestricted error correction model, the indirect economic costs of political unrest are estimated for Tunisia, as an example of the Arab spring countries. Foreign direct investment fell by 17% in Arab countries. Indeed, the Arab Spring countries are the most affected countries in terms of investment as the fall of FDI for Tunisia by 21%. In the same direction, Egypt lost 92% of its FDI since it records $ 0.5 billion in 2011 against $ 6.4 billion in 2010 and also Libya 87% and 65% in Syria .This substantial loss is a warning sign that should be seriously taken into account by politicians and economists from the Middle East and the Arab Union, especially for countries whose resources are already limited.