More broadly, political turbulence since the
early 2000s has affected not only the level of FDI
in MENA, but also its composition; it has
skewed it towards activities that create the least
jobs or that create jobs in non-tradable sectors.
At the same time, it has discouraged the high
quality FDI in non-resource tradable
manufacturing and services needed for export
upgrading and diversification. By hurting these
efficiency-seeking investments, shocks to
political stability exacerbate the clustering of
FDI in the extractive industries and non-tradable
sectors – a problem associated with policy
distortions and political capture that predate the
Arab Spring.