Geopolitical Risks (GPRs) and Foreign Direct Investments: A Business Risk Approach

Abstract

This research seeks to investigate the effect of Geopolitical Risks on Foreign Direct Investment. Data are from all sixteen countries in West Africa. This research uses the Generalized linear model to examine the effect of geopolitical risk on Foreign Direct Investment. The findings reveal that although geopolitical risk(s) have an impact on Foreign Direct Investment, however, not all the components of Geopolitical risk(s) have the same relationship with Foreign Direct investments. The implication for this is that investors need to have sufficient information on Geopolitical Risk(s) to do a risk assessment and see whether the Geopolitical Risk(s) is within their risk appetite and risk culture. This research adds to the literature of decision theory, which states that the client must have sufficient knowledge about issues and topics of interest before making a decision.