The impact of foreign direct investment on exports in the kingdom of Saudi Arabia (an empirical study)

Mahmoud Magdy Barbary ,Abdalla Ramadan Tawfiq

doi:10.24294/jipd.v8i6.4990

Home - JIPD - Volume 8 - Issue 6

Submit to JIPD

Journal Browser

Volume | Year

Issue

• Current lssue

View All

News and Announcements

View All

The impact of foreign direct investment on exports in the kingdom of Saudi Arabia (an empirical study)

Mahmoud Magdy Barbary

Abdalla Ramadan Tawfiq

Journal of Infrastructure Policy and Development 2024, 8(6); https://doi.org/10.24294/jipd.v8i6.4990

Submitted：04 Mar 2024

Accepted：09 Apr 2024

Published：10 Jul 2024

Download PDF(277.39KB)

XML

Abstract

This study is considered one of the few studies that attempted to explore the relationship between exports and foreign direct investment in the Kingdom of Saudi Arabia. The study aims to determine the nature of the relationship between exports and foreign direct investment in the Kingdom of Saudi Arabia during the period between (1990–2023). Employing Ender’s methodology using cointegration and error correction model. The study also relies on data on Saudi exports and foreign direct investment inflows from the World Bank databases. The results indicate the existence of Cointegration between foreign direct investment (FDI) inflows and the Saudi exports in the period (1990–2023), as for the causal relationship between the two variables, the results showed the causal relation between exports and FDI inflows from the direction of exports only, which means that Saudi exports cause FDI inflows in Saudi Arabia, and the study recommends giving more incentives to attract foreign investors in different sector rather than oil sector, besides improving the logistical services which is vital to any investment attraction strategy.

Keywords

References

Babu, A. (2018). Causality between foreign direct investments and exports in India. Theoretical and Applied Economics Volume, 4(617), 135-144.

Barbary, M., (2022). Foreign direct investment-Exports causality in Egypt, Journal of faculty of politics and economics Bani Suef University, 16(15), 6-27.

Enders, W. (1995). Applied Econometrics Time Series. Wiley.

Jaumatte, F. (2004). Foreign direct investment and regional trade agreement: The market size effect revisited. International Monetary Fund.

Khan, K., Leng, K (1997). Foreign Direct Investment, exports and Exonomic growth. Singapore Economic Review, 42(2), 40-60.

Kojima, K. (1985). Japanese and American Investment in Asia: A Comparative Analysis. Hitotsubashi Journal of Economics, 26, 1-35.

Liu, X., Burridge, P., & Sinclair, P. J. N. (2002). Relationships between economic growth, foreign direct investment and trade: evidence from China. Applied Economics, 34(11), 1433–1440. https://doi.org/10.1080/00036840110100835

Metwally, M. M. (2004). Impact of EU FDI on economic growth in Middle Eastern countries. European Business Review, 16(4), 381–389. https://doi.org/10.1108/09555340410547035

Pacheco-Lopez, P. (2005). Foreign Direct Investment, Exports and Imports in Mexico. The World Economy, 28(8), 1157–1172. https://doi.org/10.1111/j.1467-9701.2005.00724.x

Rifat, T. B. (2012). Economic growth, exports, and foreign direct investment in least developed countries: A panel granger causality analysis. Economic Modelling, 29, 868-878.

Sultan, Z. A. (2013). A Causal Relationship between FDI Inflows and Export: The Case of India. Journal of Economics and Sustainable Development ISSN 2222-1700, Vol.4, No.2, 2013.

Tocar, S. (2018). Determinants of Foreign Direct Investment: A Review. Review of Economic and Business Studies, 11(1), 165–196. https://doi.org/10.1515/rebs-2018-0069

Todaro, M., & Smith, S. (2015). Economic Development, 7th ed. Boston.

UNCTAD. (2005). World Investment Report, 2003–2005. Available online: https://unctad.org/system/files/official-document/wir2005_en.pdf (accessed on 15 January 2024).

UNCTAD. (2021). World Investment Report 2021. Available online: https://unctad.org/system/files/official-document/wir2021_en.pdf (accessed on 18 January 2024).

UN CTAD. (2023). World Investment Report 2023. Available online: https://unctad.org/system/files/official-document/wir2023_en.pdf (accessed on 18 January 2024).

USA Department of State. (2023). 2023 Investment Climate Statements: Saudi Arabia. Available online: https://www.state.gov/reports/2023-investment-climate-statements/saudi-arabia/ (accessed on 10th February 2024).

Vernon, R. (1966). International Investment and International Trade in the Product Cycle. The Quarterly Journal of Economics, 80(2), 190. https://doi.org/10.2307/1880689

Wei, Y., Wang, C., Liu, X. (2001). Causal links between foreign direct investment and trade in China. China Economic Review, 12, 190-202.

Zeddies, G. (2007). Determinants of International Fragmentation of Production in the European Union. IWH Discussion Papers.

Zhang, K. H. (2005). How Does FDI Affect a Host Country’s Export Performance? The Case of China. Available online: https://faculty.washington.edu/karyiu/confer/xian05/papers/zhang.pdf (accessed on 23 January 2024).

Previous
article in this issue

Next
article in this issue