Does country risk affect foreign direct investment: Evidence from emerging countries

The goal of this research is to look at the relationship between country risk and foreign direct inflows in 20 emerging economies from 2010 to 2019. A variety of indicators are used to reflect all aspects of country risk, including political risk, credit ratings, debt indicators, debt in default, short-term financing, financial performance, and forfaiting. Panel data analysis using the FMOLS technique was used for this. The empirical findings reveal that the bulk of country risk indicators negatively impact the foreign direct investment. According to the research, emerging countries' economic crisis has resulted in significant financial concerns. It is undeniable that countries with minimal political risks have more efficient economies. This shows that, in order to attract more international investment, governments should play a key role in decreasing country risk.