This paper explores the relationship between political risk, institutions, and foreign direct investment (FDI) inflows in 83 developing countries from 1984 to 2003. Using various econometric techniques, the authors identify the most significant indicators affecting multinational corporations' activities. The study finds that government stability, the absence of internal conflict and ethnic tensions, basic democratic rights, and ensuring law and order are crucial determinants of FDI inflows. The results are robust across different econometric models, with government stability and law and order showing the highest significance levels. The paper also examines the impact of other indicators such as investment profile, corruption, military influence, religious tensions, and democratic accountability. The findings suggest that changes in these political risk and institutional components are highly relevant for multinational corporations' investment decisions.This paper explores the relationship between political risk, institutions, and foreign direct investment (FDI) inflows in 83 developing countries from 1984 to 2003. Using various econometric techniques, the authors identify the most significant indicators affecting multinational corporations' activities. The study finds that government stability, the absence of internal conflict and ethnic tensions, basic democratic rights, and ensuring law and order are crucial determinants of FDI inflows. The results are robust across different econometric models, with government stability and law and order showing the highest significance levels. The paper also examines the impact of other indicators such as investment profile, corruption, military influence, religious tensions, and democratic accountability. The findings suggest that changes in these political risk and institutional components are highly relevant for multinational corporations' investment decisions.