Global Journal of Management and Business Research, B: Economics and Commerce, Volume 20 Issue 1

and Foreign Direct Investments: A Business Risk Approach This research seeks to investigate the effect of Geopolitical Risks on Foreign Direct Inv estment. 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 . Keywords: geopolitical risk. foreign direct investment. politics. geography. macroeconomics. risk management. I. I ntroduction eopolitical Risk (GPR) poses a serious concern for investors all over the world. In Nigeria, religious and political instability caused a massive loss in oil and gas industry(Inyang 2018). Investments in Africa and much of the Middle East were affected by the Arab spring for a long time 1 . “Brexit 2 Malmgren 2015 In June 2016 are few examples of geopolitical repercussions on investment. These incidents are indicators that maximum consideration should be given to GPR when making investment decisions. The causes of GPR are, political instability, terror is m, con fl ict between countries or state that can disrupt business activities and international relation ( , Caldara and Iacoviello 2018), these risks are becoming significant as most important researches have identified them as essential determinants of investment decision (Carney 2016, Balcilar, Bonato et al. 2018, Caldara and Iacoviello 2018). Risks, especially political risks, are among the important determinant of FDI identified by pervious writers (Barthel, Busse, et al. 2010, Baek and Qian 2011).GPR includes political risks,this fact makes it very important to ensure an assessment of all risks including the ones that are geopolitical are analyze before making an investment decision. Foreign direct investment (FDI) is an investment in a business by an investor from another country for which the foreign investor has control (10% or more voting stock) over the company purchased (OECD, 1998). FDI is the inflow of investment by an investor into a specific country with a view of having a controlling interest in the firm. (Jeffrey & Spaulding, 2005). Generally, FDI improves employment, productivity, and economic growth. It plays a role in development, foreign exchange, investment, and tax revenue gaps in developing countries (Smith, 1997; Quazi, 2007).The in flows of FDI can contribute to Africa’s development efforts of employment generation and growth, having a stake in the global economy, the transfer of modern technologies, improving efficiency, and increasing the skills of local Labor (Dupasquier & Osakwe, 2003; Anyanwu, 2003).Because of these advantages, African countries are striving to avoid any risk that might discourage foreign direct investment. Countries in West Africa have experienced numerous of political instabilities over the years, some countries in this region are the most corrupt in the world, their economy is not booming, natural hazard affects some of these countries, and FDI inflows to West Africa are not stable. The above mentioned are the motivations for researching on west Africa. Generally, this paper investigates whether geopolitical risks (GPRs) have an impact on FDI taking the following research objectives into cognizance: to ascertain risks associated with geopolitics; to assess if all the components of GPR(s) affect FDI the same level . In trying to fulfill these objectives, it is necessary to look at geopolitics from a business risk approach. Business risk involves looking at a business or investment as a whole and identifying events and circumstances that may affect such business from achieving its G Author α ρ : Ph. D. Student Dongbei University of Finance and Economics School of Accounting. e-mails: sianyande@outlook.com , jkuyon@yahoo.com Author Ѡ : Ph. D. Student Dongbei University of Finance and Economics School of Economics. e-mail: Djerisow88@yahoo.fr 1 The Arab Spring was about series of anti-government protests and rebellions that occurred in the Middle East in 2010. The cause of it was the result of the oppressive governance system and a low standard of living. See Noueihed, L. (2011). "Peddler’s martyrdom launched Tunisia’s revolution." Reuters. 2 The withdrawal of the United Kingdom (UK) from the European Union (EU) led to the genesis of the term Brexit. See Clarke, H. D., et al. (2017). Brexit, Cambridge University Press. © 2020 Global Journals 1 Global Journal of Management and Business Research Volume XX Issue I Version I Year 2020 ( ) B Geopolitical Risks (GPRs) Abstract- Nyande Fania Chen Yan σ , Joseph Bikanyi Kuyon ρ & Sow Djeri Ѡ Author σ : Professor; China Internal Control Research Center and School of Accounting. Dongbei University of Finance and Economics. e-mail: Chenyan2001@126.com α ,