Country risk factors and external financing options to promote economic growth in emerging economies

The competition among emerging markets for foreign investment is intense. This has led to many countries being adversely affected by the reversal of capital flows caused by changes in international dynamics, while other countries have managed to record increases in economic growth due to the increased capital flows. This research examines the impact of country risk factors on foreign direct investment (FDI) and foreign portfolio investment (FPI) in 30 emerging countries. The results indicate that lower economic risk does not result in higher FDI in the majority of countries, while political and financial risks impact FPI in 50% of the sample. Finally the analysis indicates that all these factors impact economic growth in most countries.