The Impact of Fdi on Growth of Saudi Economy: An Empirical Evaluation of Manufacturing Sector

Abstract

Foreign Direct Investment (FDI) inflows have produced considerable impact on the economy of the Kingdom of Saudi Arabia, both directly and indirectly, by playing major role in stimulating the growth potentials and providing stability to the Kingdom's economy. This study aims to evaluate the impact of FDI inflows on the economy of Saudi Arabia in general, and on the manufacturing sector in particular, over the last few decades, more specifically over the period from 1968 to 2014, by using Ordinary Least Square (OLS) method. The results showed positive significant impacts, but limited, of FDI on manufacturing sector in Saudi Arabia during this period. The results also found positive impacts of labor, non-oil private capital formation, and the latest Foreign Investment Act (FIA) enacted in 2000. Finally, conclusion and recommendations to promote the role of FDI in developing the manufacturing sector of Saudi Arabia.

Inward FDI and Manufacturing Sector Productivity: An Empirical Evidence from the Dynamic ARDL Approach.

“…Banga (2006) examined the impact of FDI inflow on the India manufacturing sector and found that the impact on export is positive particularly for the FDI from US. The study added that the diversification of export in India is also promoted by FDI inflow from US in line with the works of Bardesi (2016) and Jordaan (2008). Masron, Zulkafli and Ibrahim (2012) examined the effect of FDI inflow on the manufacturing sector and found a mixed results.…”

Impact of Gdp, Foreign Direct Investment, Inflation Rate, and Interst Rate on Stock Market Values in Saudi Arabia

“…These macroeconomic factors would affect the returns reflected in the stock market index. FDI inflows have affected on the economy of Saudi Arabia both directly and indirectly by playing an important role in providing stability to and motivating growth potentials for the economy (Algarini, 2018, Bardesi, 2016.…”