[Foreign Investment in Saudi Arabia]

By

CHAPTER 1: INTRODUCTION2

1.1Background of the study2

1.2Problem Statement4

1.3Aims of Research5

1.4Research Questions6

1.5Research Objectives7

1.6Importance of the research7

1.7Summary/overview of global and regional FDI stock/flows8

1.8Structure of the dissertation11

CHAPTER 2 LITERATURE REVIEW12

2.1FDI theories and conceptual summary13

2.2Determinants of Foreign Direct Investment14

2.3Relationship between foreign direct investment and economic growth of the recipient country16

2.4Attractiveness of a country to foreign capital18

2.5Steps that a government can take to attract foreign capital21

2.6Reasons behind success of foreign ventures in a country23

2.7Reasons behind failure or suboptimal performance of foreign capital in a country24

2.8Summary26

CHAPTER 3 METHODOLOGY28

3.1Research Philosophy: Positivism Or Phenomenology28

3.2Research Technique: Qualitative Or Quantitative29

3.3Research Design30

3.4Primary Research31

3.5Sampling32

3.6Research Instruments33

3.7Data Collection34

3.8Secondary Research34

3.9Resources34

3.10Nature Of Data35

REFERENCES40

CHAPTER 1: INTRODUCTION

The purpose of this dissertation is to analyse the attractiveness of Saudi Arabia to foreign capital and review the success of foreign investments in penetrating the local market and establishing sustainable operations. Foreign investment is being pursued actively by countries to increase their GDPs, generate higher employment and make better use of their resources. The high and sustained economic growth of China after high amount of foreign investments supports the decision of governments to attract foreign investment. Developing countries have limited amount of sources of their own and attracting foreign capital can have a positive impact on their economies.

1.1Background of the study

Foreign investments have increased significantly over the past couple of decades and have become a major component of the overall economy of many nations. Foreign direct investments have always been viewed as an addition to local economies and have thus become a resource that almost every economy is trying to attract. That being said, and despite the fact that governments are giving great importance to foreign direct investments to stimulate their local economies, foreign investors are still facing barriers in many countries, or least to say, are shying away from major countries despite huge potential.

Saudi Arabia's GDP and GDP per capita were $576 billion and $9,425 respectively in 2011 (Trading economics, 2013). It is the largest exporter of oil in the world. In the recent decades, the government of Saudi Arabia has used oil proceeds to diversify its economy and today produces and exports many industrial goods (About Saudi Arabia, 2013). This was mainly for two reasons. First, oil revenue will not last for more than 50 years, and therefore the country needs additional sources of income. Secondly, unemployment rate in Saudi Arabia was 5.5% in 2012 (Trading economics, 2013). Significant unemployment rate infers that the country could face social uprisings in the future as seen in many Middle East countries in the last two years.

The research aims at discovering the attractiveness of the Saudi market to foreign capital and how successful were foreign investments in penetrating the local market and establishing sustainable operations. The size of the Saudi economy and the vast opportunities out there due to huge government spending and huge private consumption have always been an attraction to foreign capital but what has the Saudi government done to create an attractive investment environment. According to Grant, Golawala & McKechnie (2007), the United Arab Emirates ...