Socio-economic instability and its effect on private sector investment

The unstable, insecure and high-risk environment reduces the willingness of investors to invest in that society. When talking about a stable environment, all economic, social, financial, etc. aspects are taken into consideration, which have not been given the attention of researchers in its comprehensive sense. In the current research, using the econometric methods of PCA, ARCH-GARCH, ARDL and statistics from 1991 to 2022, using a set of variables in the economic, social and financial sectors; A general index for instability and risk has been created and along with key variables such as bank facilities and credits, military budget (political security) and total production, their effect on private sector investment has been estimated. Therefore, economic instability has the least impact compared to other instabilities, and it becomes necessary to pay attention only to instability in economic variables cannot reduce uncertainty to the desired level; Rather, the society should be considered from all aspects in curbing instability.Conclusion:In Iran, as expected, investment is faced with uncertainties consisting of instability in the economic environment, anomalies and instability in the social sphere, and risk in the financial markets, which significantly affect the investment process of the private sector. and have caused a decrease in it. Therefore, with a more comprehensive look at the problem of instability and the analysis of the effect of systemic thinking, it becomes necessary to pay attention to investment and the effect of instability on it, only in economic variables, it cannot reduce uncertainty to the desired level; Rather, the society should be considered from all aspects in curbing instability. Therefore, the managers of the country in different sectors, especially economic and social, should implement policies that reduce instability in these sectors in order to create a safe and reliable environment for economic activities, especially investment.