Impact of World Uncertainty Shocks on Foreign Direct Investment: An Empirical Investigation Based on GVAR Model

Articles in Press

Document Type : Research Paper

Authors

1 PhD student of Allameh Tabatabai University Faculty of Economics

2 General Economic Affairs,Faculty of Economics, Kharazmi University, Tehran

3 General Economic Affairs, Faculty of Economics, Kharazmi University, Tehran

Abstract

Foreign direct investment is one of the most important tools in the growth and development of countries. In recent years, understanding the impact of uncertainty as a potential driver of international investment flows has received attention.

To examine the impact of global uncertainty on foreign direct investment, a global vector autoregression model and a sample of 33 countries over the period 1991: 2Q to 2023: 4Q are used. This study makes a significant contribution to enriching the foreign direct investment literature by using a global uncertainty index that covers different aspects of uncertainty as well as a global vector autoregression model that considers the linkages between countries in the world.

Foreign direct investment shows heterogeneous effects following global uncertainty shocks, as a large impact on foreign direct investment is observed in some countries, while others are less affected. The long-term results for most countries show a negative impact of the global uncertainty shock on FDI flows.

This negative impact is explained by the postponement of investment in uncertain conditions.

Keywords

Main Subjects

Applied Theories of Economics

Articles in Press, Accepted Manuscript
Available Online from 18 April 2026

Files

Share

How to cite

Statistics