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

research model had to change from that of the ordinary least square to the General least square(GLS)-.The Generalized Least Squares (GLS) is a technique for estimating the unknown parameters in a linear regression model when there is some amount of correlation (Alexander Aitken 1934) By using the GL S model, al l variabl es of Geopolitics have a significan t impact on Foreign Direct investment. Exposures to natural hazards and Susceptibility risk have a significant impact of 0.039 and 0.008 on FDI, respectively. Exposure index has a negative relationship with FDI, which means: when the risk of exposure to the natural hazards is high, then the foreign direct investment will decrease. However, this is not the case of susceptibility risk: which is the likelihood of suffering harm in the event of a natural hazard process. The result shows that susceptibility risk has a positive effect on FDI, meaning when susceptibility risk increases, FDI also increases. An interpretation of this can be that in the case where a natural disaster causes suffering, investor sees it as a business opportunity. Macro-economic variables; Merchandised trade, employment, exchange rate, inflation have a significant impact on FD1, respectively. Merchandised trade (trade) has an effect of 0.021 on FDI, and also a positive relationship with FDI. This means when trade openness for good increases, FDI also increases. Employment (emp) has a significant impact of 0.001 on FDI, but with a negative relationship. Meaning, when a country’s employment-population increases, then FDI decreases. Exchange Rate (exl) has a significant impact of 0.025 on FDI with a negative relationship on FDI. Finally, Inflation-GDP deflator (inf) has an impact of 0.065 on FDI with a positive relationship. Take a scenario where higher inflations mean the value of a local currency is deflating, this will lead to more investment is the foreign currency (US dollars) as it is considered stronger. Political indicators like Voice and Accountability (VAA), Political Stability and Absence of Violence (PSNV), Government Effectiveness (GoE), Regulation Quality (Reg Q), and Control of Corruption (COC) respectively have a significant effect on FDI.VAA has a significant impact of 0.019, with a negative relationship with FDI. Both PSNV and GoE have a significant effect of 0.024 and 0.033 respectively. Also, both have a positive relationship with FDI. Meaning when there are political stability and non-violence, then FDI will increase, and where there is Government Effectiveness, FDI will also increase. COC also has a significant effect of 0.084 on FDI with a positive relationship; means in the case of less corruption, FD Iincrease. Finally, strict regulations tend to cause a decline in FDI. It (Reg Q) has a significant impact on FDI. Coefficient: Generalized least squares Panel: Homoskedatic Correlation: No auto-correlation Estimated covariance =1 Estimated Autocorrelation =0 Estimated Coefficient =17 Number of obs =112 Number of groups =16 Time period =7 Wald chi 2(16) =121.21 Prob>chi =0.0000 fdigdp coef Std.Err Z p>/z/ (95% conf interval) exp -1.278676 .6182243 -2.07 0.039 ** -2.490373 -.0669787 vul -1.202087 1.937611 -0.62 0.535 -4.999735 2.59556 sus 1.966978 .7434138 2.65 0.008 *** .5099136 3.424042 icc .0906522 .4300737 0.21 0.833 -.7522767 .9335811 iac .0020794 .6855016 0.00 0.998 -1.3144479 1.345638 trade .168977 .0733236 2.30 0.021** .0252653 .3126887 emp -.5072512 .1478906 -3.43 0.001*** -.7971114 -.2173909 exl -.0013045 .0005824 -2.24 0.025 ** -.0024459 -.000163 icp .0335847 .2776874 0.12 0.904 -.5106727 .577824 inf .221492 .1198644 1.85 0.065 * -.0134378 .4564219 vaa -.2942941 .1252778 -2.35 0.019** -.5398342 -.048754 psnv .2367074 .1052032 2.25 0.024** .0305129 .4429018 goe .4868939 .2277155 2.14 0.033 ** .0405798 .933208 regg -.8694653 .204261 -4.26 0.000 *** -1.269809 -.4691212 rol .2153904 .2464974 0.87 0.382 -.2677357 .6985165 coc .3030627 .1756519 1.73 0.084* -.0412087 .6473341 cons 22.09875 39.53032 0.56 0.576 -55.37926 99.57676 Geopolitical Risks (GPRs) and Foreign Direct Investments: A Business Risk Approach © 2020 Global Journals 5 Global Journal of Management and Business Research Volume XX Issue I Version I Year 2020 ( ) B