Foreign direct investment and ecoonomic growth in Saudi Arabia from 1980 to 2012 : an ARDL approach

Abstract EN

his paper empirically investigates the short and long-run GDP-FDI relationship along with other macroeconomic variables in Saudi Arabia.

The Autoregressive Distributed Lag (ARD-L) model is our main instrument of analysis because of its obvious econometric advantages, to explore the interdependencies among tlie variables.

The results confirm that FDI inflows and Government expenditures have significant and positive relationship with GDP growth both in the short and long-run.

They are therefore, important factors in Saudi’s developmental efforts.

The sensitivity of the Government expenditures variable to the trade Openness and GDP growth variables in this study is also significant.

This suggests that Government or public expenditures both in the form of capital or recurrent should be monitored to strike a balance.