THE SIGNIFICANCE of FOREIGN DIRECT INVESTMENT INFLOW on ECONOMIC GROWTH in the KINGDOM SAUDI ARABIA

• Activity Number: 169 - Macroeconomic Dynamics
• Type: Contributed
• Date/Time: Monday, July 30, 2018 : 10:30 AM to 12:20 PM
• Sponsor: Business and Economic Statistics Section
• Author(s): Ashraf Ahmed* and Basim Adnan Matyuri
• Companies: Morgan State University-Institute for Urban Research and Morgan State University
• Keywords: : Foreign direct investment ; economic growth; government expenditure; labor force

Abstract

The paper addressed the issue of the contribution of foreign direct investment (FDI) on economic growth in Saudi Arabia over the period from 1980 to 2014. Before analyzing the data, the paper presents major sources of FDI inflow in Saudi Arabia and the prevailing effect of FDI in neighboring countries. The analysis was carried out using the time-series data obtained from the World Bank Database, Ministry of Education, Central Department of Statistics & Information and United Nations Conference on Trade and Development (UNCTAD) stat. Specifically, the unit-root and co-integration tests were used to assess the autocorrelation before running auto-regression. The results based on the dynamic regression model indicate that FDI has a positive significant effect on economic growth (GDP), while the effects of government expenditure, secondary education, gross fixed capital formation and labor force have been controlled. In addition, cross-correlation between GDP growth and FDI has also demonstrated a long-term position relation. Thus, the data analysis shows some positive impact of FDI on economic growth of Saudi Arabia.