An empirical study on FDI, inward or outward Essay

An empirical study on FDI, inward or outward - Essay Example Irrespective of the form of FDI, they are quintessentially featured by the investor’s profit motives but are also characterised by attributes which contribute to the recipient nation’s economic growth (Nijkamp & Toth, 2006, p. 27). This is in fact the reason why developing nations all around the world are keen to attract FDI inflows which recuperates their resource crunch by a large extent. Saudi Arabia is also one of the nations which have recently understood the importance of foreign direct investment for a sustainable long term economic growth. This actually has stimulated the amount of FDI inflows within the nation from Middle-Eastern nations as well as non Middle-Eastern ones. Statistics recorded in the year 2010 state the total volume of FDI inflows in Saudi Arabia to equate almost US$ 5.8 billion. This has actually assisted in capital enhancement in the economy, a growth in productivity of factors as well as an improvement in employment opportunities within the e conomy (Ramady, 2010, p. 343). In addition, the nation is also involved in FDI outflows, which equally contributes to the nation’s development through returns on investment. ... The diagram underneath reflects the traits in gross FDI inflows in the economy between 2005 and 2009. It clearly shows a rising positive trend in the same in addition to a rise in the nation’s stock of capital being accumulated. However, despite the overall positive scenario, the gross volume of FDI inflows is found to have diminished between 2008 and 2009 even though it is a nominal one, amounting to US$ 2.7 billion. But one positive point about this negative difference is that it is much lower in magnitude compared to the magnitudes of rise in FDI inflows that the nation had been experiencing over the past few years. This very fact suggests a smoothening of fluctuation in the inflowing volumes of FDI which implies a softening of discrepancies. In fact, as far as the Government of Saudi Arabia has opined, the economy possesses immense potentials which could be employed in enticing more FDI. This is evident from the reduction or easing of annual differences in inflows and outf lows within and out of the economy (SAGIA, 2010, p. 2). Growth in the volume of FDI outflows is also found to be quite satisfactory as FDI inflows. This is evident from the diagram underneath which shows a consistent rise in FDI outflows between 2002 and 2005 even though the nation faced with considerable depreciation in 2006 (values in the diagram denominated in US$ billion). While, the fall in the FDI outflows during recent years could be regarded as a temporary fluctuation, the largely rising trend is assigned to hefty export revenues earned by GCC nations owing to a hike in oil prices (UNCTAD, 2007). As far as the statistics for the year 2006 are concerned, Saudi Arabia along with UAE and Egypt