COVID-19 Stringency Measures, Risk of Openness and Foreign Investment : Some Preliminary Evidence

This paper investigates the relationship between foreign investment and the containment measures, in the aftermath of the COVID-19 spread. We find that the non significant correlation between the average quarterly stringency index and inward foreign investment at the end of the first quarter of 2020 hides a source of heterogeneity across countries. Foreign investors highly rate the implementation of strong containment measures - as measured by government stringency index - in countries with high risk - as measured by the risk of openness index. Conversely, foreign investors are less attracted by assets issued by countries adopting weak stringency measures despite a high risk of openness, or those implementing drastic stringency measures in the presence of a relatively lower risk of openness