Risks and Foreign Direct Investment Inflows: Evidence from Yemen
Risiko dan Pelaburan Langsung Asing: Bukti dari Yaman

School of Economics, Finance and Banking
College of Business
Universiti Utara Malaysia
06010 UUM Sintok, Kedah, MALAYSIA.

hamdan@uum.edu.my

School of Economics, Finance and Banking
College of Business
Universiti Utara Malaysia
06010 UUM Sintok, Kedah, MALAYSIA.

diana897@uum.edu.my

School of Economics, Finance and Banking
College of Business
Universiti Utara Malaysia
06010 UUM Sintok, Kedah, MALAYSIA.

angappan@uum.edu.my

Abstract

This study aims to find the relationship between the political, exchange rate and inflation risk factors with the yearly foreign direct investment (YFDI) in Yemen, over the period between 1990 to 2010. Secondary data results showed that political risk and exchange rate risk have an inverse relationship with YFDI, while inflation risk has a significant positive relationship. Further analysis on a survey collected from 62 multinational enterprises (MNEs) operating in Yemen showed an insignificant relationship between the perceived political, exchange rate and inflation risk factors and corporate foreign direct investment (CFDI). The conflicting results possibly imply that the MNEs’ subsequent capital investments may not be affected by the perceived political, exchange rate and inflation risks that would nonetheless have been considered during the initial business plan. It is likely that MNEs that were already operating in Yemen may have developed capabilities in terms of knowledge, bargaining and lobbying skills. Therefore, perceived risks are no longer seem to influence their investment decisions.

Keywords

exchange rate risk; foreign direct investment; inflation risk; multinational enterprises; political risk

Citation

Al-Jaifi, H. A. A., Abdullah, N. A. H., & Regupathi, A. (2016). Risks and Foreign Direct Investment Inflows: Evidence from Yemen. Jurnal Pengurusan, 46, 89–97.

@article{aljaifi2016risks,
  title={Risks and Foreign Direct Investment Inflows: Evidence from Yemen},
  author={Al-Jaifi, Hamdan Amer Al and Abdullah, Nur Adiana Hiau and Regupathi, Angappan},
  journal={Jurnal Pengurusan},
 

volume={46},
  number={},
  pages={89—97},
  year={2016},
  doi={},
  publisher={Penerbit UKM},
}

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46 (2016) 89 – 97

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