The paper aims to empirically
explore the impact of the Arabic Spring on the outflow of FDI in twelve
selected countries in the North Africa region (Algeria, Tunisia, Morocco,
Libya, Egypt and Mauritania) and the Mideast region (Bahrain, Kuwait, Oman,
Lebanon, Jordan and the United Arab Emirates). The paper employs a panel data
approach to exploit the time series nature of the relationship between FDI Outwards
and its determinants (the market size, trade openness, government
effectiveness, inflation and three dummy variables related to the Arab Spring)
between 2000 and 2016. The findings revealed that the impact of the Arab Spring
estimator is negatively correlated with FDI Outflows in the countries that witnessed the Arab
Spring. It implies that conflicts and instability negatively affect FDI
outflows. The findings of this study reveal that countries that have been
affected by the Arab Spring directly (the North Africa region) experienced a
greater decline of FDI outflows than countries that have been indirectly affected (the Mideast region). When
the sample is restricted to North Africa it is shown that the FDI outflows may
be influenced by the post Arab Spring effect, while there is no such statistically
significant effect in the Mideast
region. Thus, the study finds that FDI outflows in the North African countries are more determined by the effects of
Arabic Spring countries than in the Mideastern countries.