Country-specific determinants of FDI inflows to the MENA region

Abstract

Purpose This paper aims to synthesize, analyze and categorize the empirical literature on country-specific factors that affect foreign direct investment (FDI) inflows to the Middle East and North Africa (MENA) region. Identifying gaps and methodological challenges in the reviewed articles, recommendations are made to guide future research. Design/methodology/approach Applying the systematic review methodology, content analysis is conducted of 42 relevant empirical studies that explore country-specific FDI determinants in the MENA region during the period 1998–2018. Findings This review study identifies four main research gaps in the extant literature: a lack of consensus on a common definition of the MENA region and a weak understanding of the specificities of its investment environment; a limited set of FDI theories used and a lack of other theoretical perspectives; a recurrent focus on the direct relationship between host country–specific determinants and FDI, thus ignoring the moderating and mediating effects of some variables; and the absence of certain country-specific factors pertaining to the MENA countries. Originality/value This study contributes to the international business field by enhancing our understanding of the FDI determinants in emerging and developing markets, especially the MENA countries. It develops a typology of FDI country-specific factors in the MENA region based on four main categories: macroeconomic and financial, institutional and regulatory, natural resource endowment and socio-cultural. Paths for future research are suggested.

Surviving the Arab Spring: socially beneficial product portfolios and resilience to political shock

“…This is a problem because research has increasingly shown that while managers can and do learn from coping with exogenous shocks, whether political or natural (Oetzel and Oh, 2014;Jiménezet al, 2018), the learning is often constrained to country (Oh and Oetzel, 2017) or even subcountry levels (Oh et al, 2020). This is because countries and sub-regions vary along dimensions of institutional quality, influence of religion, government policy, regulatory enforcement, transparency and business norms (Dimitrova et al, 2019;Estrin and Prevezer, 2011). Indeed, the learning from shocks and subsequent choices may be further constrained or enabled by company-country-specific contingencies such as particular company capabilitiesfor example, country-savvy, in-house legal expertise (White et al, 2020); high-trust relationships with management of other subsidiaries or firms coping with the same uncertainties in the same locations (Oh et al, 2020); and even ideological match between firm and country or regional leadership (Viatcheslav and Tensaout, 2016).…”

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“…The MENA region offered several advantages for the study. In Surviving the Arab Spring particular, the prevalence of authoritarian governments and weak institutions tended to emphasize the influence of political factors, whereas the diversity of cultures, institutional quality and economic conditions led to variation in the impact of and reactions to the unexpected political shock of the Arab Spring (Dimitrova et al, 2019). We chose construction both because of its ubiquity and because of its exposure to political shocks given the role of government in regulation and financing.…”

The impact of state fragility on FDI inflows: The moderating role of natural resources and democratic governance in the MENA region

“…First, this article seeks to integrate the concept of state fragility in IB research as an important determinant of FDI flows, especially in emerging and developing countries. Second, this paper provides an original analysis of the relationship between state fragility and FDI in a region that remains understudied in IB, namely the MENA region (Dimitrova et al, 2020;Elbanna et al, 2020), by highlighting the importance of location-specific institutional and natural endowment factors likely to moderate this relationship.…”

The influence of motivations on international location choice in least developed, emerging and developed countries: evidence from Chinese MNEs

“…Location decisions are crucial for multinational enterprises (MNEs) because they have the potential to determine subsequent company performance (Jain et al , 2013). Correspondingly, a growing body of research has examined different determinants of international location choice (Albino-Pimentel et al , 2018; Cui et al , 2017; Dimitrova et al , 2020; Lu et al , 2014; Schotter and Beamish, 2013). The determinants addressed in the literature can broadly be grouped into firm- and industry-specific determinants, and host country-specific determinants (Jain et al , 2016).…”