This document discusses the effects of political factors on foreign direct investment (FDI) flows based on a review of existing literature. It finds that while economic factors are important determinants of FDI decisions, political environment and institutional quality also significantly impact FDI flows. Specifically, countries with greater political stability, transparent legal systems, and market-supporting policies tend to attract more FDI. However, the literature lacks consensus on how to define and measure political risk and institutions. The review also notes gaps in distinguishing between firm-level and country-level perspectives on FDI determinants.