Foreign Direct Investment Resilience During Times of Crisis: A Comparative Analysis Between Selected Eastern European and African Countries

Yana Mbena Jacques (Monarch Business School, Zug, Switzerland and Centre d’Economie de l’Université Sorbonne Paris Nord, University of Sorbonne Paris Nord, Villetaneuse), jacques.yana-mbena@umonarch-email.ch
Ngnouwal Eloundou Georges (Dschang School of Economics and Management (DSEM) – Association des Chercheurs en Economie du Développement Appliquée (ACEDA), University of Dschang)

Times of crisis provide the opportunity to question the behaviour of socioeconomic agents and specific phenomena around economic growth’s resilience. Hence, this paper relies on econometrics to analyse the data compiled from secondary sources mainly available within the World Development Indicators to comparatively examine foreign investors’ behavioural shifts in Eastern Europe and Africa during significant crises that the world faced during the last two decades. The aim is to identify, through their impacts, the above behavioural shifts and thereby assist policymakers in advancing policies strengthening and nurturing foreign direct investments’ “FDI” resilience and maintenance during and post-crises. It was uncovered that foreign investors appear to reduce their exposure during crises in Eastern Europe and Africa. The decrease in inflows seems to be higher in Eastern Europe than in Africa. However, the change in net FDI effects on infrastructure, trade openness, and economic growth is more significant in African economies. It is therefore believed that, to nurture FDI resilience or maintenance post-crisis, lawmakers should infer policies supporting the reduction of FDI outflows, the development of infrastructure, the improvement of trade openness, and ultimately advancing a sustainable FDI agenda. Through an empirical analysis of the effects that crisis periods have on FDI in Eastern Europe and Africa, the paper gives suggestions regarding policies that encourage fostering FDI resilience and maintenance in these regions. However, while future research may build on the above, there is a need to particularly investigate how sustainable instruments may support FDI resilience during crises.

Keywords: FDI, resilience, crisis, economic growth, Eastern Europe, Africa