How does political stability influence foreign investment? 🔊
Political stability is pivotal for attracting foreign investment, as investors typically seek environments with predictable regulatory frameworks and low risk of unrest. A stable political climate fosters confidence among investors in terms of returns and the safety of their investments. Conversely, instability can deter investment due to fears of expropriation, policy changes, or conflict. Therefore, governments often prioritize policies that promote stability to create a favorable economic climate, which ultimately contributes to long-term economic growth.
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