This chapter is about weak business climate as a cause for foreign direct divestment. The aim is to show the connection between a poor business climate and foreign direct divestment. The methodology used entails a review of the different factors of the business climate such as the ease to do business, corruption, and rule of law. A review of the UNCTAD foreign direct investment flow as compared to the business climate indicators to determine a pattern is also part of the methodology. The chapter highlights the externalities of foreign direct divestment and suggests some ideas to overcome the global negative impact of foreign direct divestment as it is estimated to be significant in the aftermath of the COVID-19 pandemic. The conclusion is that foreign direct divestments can occur for different factors, some internal and some external. Weak business climates seem to play a role in a decision to divest an investment but there is no direct correlation.
Part of the book: Foreign Direct Investment Perspective through Foreign Direct Divestment