Foreign direct investment and oil/non-oil economic growth in GCC countries

Abstract

This study is aimed at explaining the impact of oil resources on foreign direct investment inflows (FDI, hereafter) for GCC countries in several ways. First, by using panel data time series technique based on data covering the period (1980-2013), we found that only oil GDP and oil degree of openness have a significant positive impact on attracting FDI. Second, by considering sectoral analysis for four GCC countries (Oman, Qatar, Saudi Arabia and United Arab Emirates), we conclude that sectoral FDI has a positive impact on sectoral GDP while this impact is negative for the case of Oman. This implies that FDI supports the program of economic diversification in Qatar, Saudi Arabia and United Arab Emirates (UAE, hereafter).