TITLE:
An Error Correction Model Analysis of the Determinants of Foreign Direct Investment: Evidence from SAUIDI ARABIA
AUTHORS:
Abdelrahman Mohamed Mohamed Saeed
KEYWORDS:
FDI, Determinants, Kingdom’s Vision 2030, ARDL Approach, Cointegration, Saudi Arabia
JOURNAL NAME:
Open Journal of Business and Management,
Vol.11 No.3,
May
31,
2023
ABSTRACT: The aim of this study was to gain insights into the factors
affecting Foreign Direct Investment (FDI) inflow in Saudi Arabia by applying the cointegration and error-correction model on annual
data over the period 2000-2020. The results of the ARDL bound test of co-integration displayed the existence
of the long-run equilibrium in the model. The long-run regression results report that openness, government spending
and economic stability are statistically significant. The coefficient of exports and market size is positive and both of them are
not significant. However, in the short-run, our evidence shows that exports, openness and economic stability are
statistically significant at 1%. The findings of the study are important for Saudi
economic policy makers to undertake effective policies that can promote and attract
foreign direct investments to diversify sources of income and boost economic growth.