Abstract
This study aims to identify the status of Saudi Arabia as a destination for FDI, the factors that attract FDI into Saudi Arabia, and the factors that hinder the flow of FDI into Saudi Arabia. The study covers a period of five years from 2015 to 2019. The study analysis various determinants of FDI: market size, infrastructure, technology adoption, innovation friendliness, productive and diversified labor force, financial infrastructure, taxation, political risk, corruption, and ease of doing business. The study finds that several factors like market size, well-developed infrastructure, a higher degree of technology adoption, innovation-friendliness, the banking system that is well-capitalized and liquid, low corporate taxes, political stability, low transfer risk, low expropriation risk, low levels of corruption, and a stable currency make Saudi Arabia an attractive destination for FDI. At the same time, the low labor market efficiency and the low ranking in ease of doing business makes it less attractive to FDI.
Highlights
The main objectives of this study are to find out the status of Saudi Arabia as a destination for Foreign Direct Investment (FDI), the factors that attract FDI into Saudi Arabia and how these can be enhanced, and the factors that hinder the flow of FDI into Saudi Arabia, and how these can be reduced
Information and Communication Technology (ICT) adoption is improving in Saudi Arabia and globally is ranked 38 in 2019, showing that it is relatively better
The factors making Saudi Arabia an attractive FDI-destination are: firstly, it has the largest market size among the GCC countries, attracting Multinational Corporations (MNCs) looking for scale
Summary
In this interconnected, interdependent world, there is a great flow of funds among countries, money flowing to destinations that offer higher returns, are more investor-friendly, and are relatively less risky. Foreign Direct Investment in The Kingdom of Saudi Arabia: A Diagnostic Analysis investment climate better and present themselves as the best FDI-friendly destination. Saudi Arabia is the largest country in the Middle East and the second-largest country in the Arab world. Saudi Arabia is the largest economy in the Middle East and the 18th largest in the world. Saudi Arabia has the world's second-largest proven petroleum reserves, and the country is the largest exporter of petroleum.
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