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

a) Sample and Variables This study used a total of sixteen countries spanning from the year 2011 to 2017 to show the link between GPR and FDI. The data focuses on countries in West Africa. West African countries use in this research are Benin, Burkina Faso, Cape Verde, The Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Mauritania, the Niger, Nigeria, Senegal, Sierra Leone, and Togo. This study uses four variables. One dependent variable is Foreign Direct Investment (FDI), and the other three independent variables are Geographical Risk (GR), Political risk (PR), and Macroeconomic Risk (MR). Independent Variables Dependent Variable b) Research Model This research uses the General least square model to effectively overcome the weaknesses of ordinary least squares to guarantee that there is an efficiency of the model parameters, unbiased standard errors, valid t statistics, and p-values, and to account for the presence of autocorrelation. Generalized Least Squares (GLS) omits the problem of heteroskedastic or auto-correlation observation. The simple form of the model is; Y = X β + ε c) Data The Institute for Environment and Human Security. United Nations University 3 3 For this research, geographical risk is limited to a natural disaster. The World Risk index has five components of risk with the following scale; Susceptibility: 9.61-16.55 very low risk, 16.56-22.06 low risk, 22.07- 31.87 medium risk,31.98-48.06 high risk,48.07-67.63 very high risk. Lack of adaptive capacities risk: 27.45-36.39 very low risk, 36.40-44.70 low risk, 44.71-49.40 medium risk, 49.41-57.27 high risk, 57.28-74.26 very high. Lack of coping capacities risk:35.75-55.45 very low,55.46-68.89 low risk,68.90-77.85 medium risk,77.86-84.86 high risk,84.87-92.07 very high risk Exposure risk: 0.10 -3.65, very low risk, 3.66-5.72 low risk, 5. 73-7.44 medium risk,7.45-10.58 high risk,10.59-36.31 very high risk. Vulnerability Risk:26.87-36.81Very low risk,36.82-46.50 low risk,46.51- 53.35medium risk,53.36-64.43 high risk,64.44-75.35 very high risk , provides Information on geographical risks. Every year (since 2011),the institution has provided a world r is k index in its publication titled World Risk Report. The World Risk Index indicates the probability that a country or region will be affected by a disaster. The five components of the world risk index are exposure to natural hazards such as earthquakes, storms, floods, droughts, and sea-level rise; vulnerability of people and society to natural disaster; susceptibility, i.e., the extent societies able to cope with severe and immediate disasters; coping capacities as a function of governance disaster preparedness and early warning, medical services, social and economic security; and adaptive capacities to future natural events and climate change. Information on political risks are from the world governance indictor provided by World Bank. 4 IV. R esult and D iscussion The Worldwide Governance Indicators consist of six broad dimensions of governance: Voice and Account a bility, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. Information on Macroeconomics risks is from the World Bank and the international monetary fund (IMF). Information from the work bank includes; Foreign direct investment inflows, inflation, Merchandised trade, and employment. Exchange rate data is from the International Monetary Fund exchange rate archives. See table 1 for the definition of variables and measurement. a) General least Square Regression result 4 For world Governance indicator, this study uses the percentile rank. The Percentile rank among all countries (ranges from 0 (lowest) to 100 (highest) rank). This means, the lower the percentile ranks, the higher the risk and the higher the percentile rank the lower the risk. GEOPOLITICAL RISK • GEOGRAPHICAL RISK • POLITICAL RISK • MACRO-ECONOMIC FOREIGN DIRECT INVESTMENT Geopolitical Risks (GPRs) and Foreign Direct Investments: A Business Risk Approach III. D ata and M ethodology The Ordinary least square (OLS) was first used as the research model, however, the observations show Heteroskedasticity and Correlation. Therefore, the © 20 20 Global Journals 4 Global Journal of Management and Business Research Volume XX Issue I Version I Year 2020 ( ) B