Abstract:

The succession of rulers in authoritarian regimes gives rise to uncertainties and sudden changes in future policies towards foreign investments (FDI). Foreign firms must assess potential succession and consider both the current non-business environment and future trends when making investment decisions. We investigate Japanese FDI and the successions in the six oil-rich Arab countries in the Persian Gulf that constitute the Gulf Cooperation Council (GCC), spanning the period from 1990 to 2019. Quantitative, empirical results indicate that Japanese firms exhibit a reduced likelihood of FDI entry to a GCC country during succession resulting from the death of the authoritarian incumbent, the impact of which diminishes within a year though. Japanese firms also evaluate future successors and will FDI-enter a GCC country with a crown prince who demonstrates strong military influence, political experience, and a background of overseas exposure. These attributes signify a smoother political succession and a positive stance toward foreign investments.

Please choose your submission type: Full Paper

Primary Track: Decision-Making Under Uncertainty

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Prof Andrew Delios