An empirical investigation on the effects of the fiscal and monetary policies on the domestic and foreign direct investment in Saudi Arabia for the period 2010–2018

Abstract

oreign direct investment is currently one of the main pillars in achieving development and economic growth, due to its important position in the economies of the countries of the world. The aim of this research is to study the impact of Fiscal and monetary policy in Saudi Arabia on attracting foreign investment for the period 2010–2018. The researcher used the multiple linear regression to test the research hypothesis. Linear regression is used to investigate the impact values by each predictor variable. The study covered the period 2010–2018, the present study chose independent variables monetary policy tools in Saudi Arabia that include (Money supply (M2), Monetary cash reserve and Exchange rate), also the present study chose fiscal tools that include (taxation and government capital spending). The Dependent Variables includes (Direct Domestic Investment and Foreign Direct Investment). E-views (version 10) software package was utilized for this purpose. Multiple linear regression was performed to test models. The results show that Money supply, Monetary cash reserve, capital government spending and taxation positively affects the domestic investments, while Exchange rate negatively affects the domestic investments. It was also found that all independent variables positively affect the foreign direct investment.