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The Effect of Foreign Direct Investment on the Unemployment Rate in Saudi Arabia

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  • Kolthoom Alkofahi

Abstract

A substantial number of recent studies were devoted to investigating the effects of Foreign direct investment (FDI) on different economic variables. Although the connection between growth and investments is widely acknowledged, the connection between FDI and the unemployment rate is not easy to determine. Taking into consideration the dispute over the true effect of FDI on the host country’s economic performance, the study’s main purpose is to take advantage of the dispute and study the effect of foreign direct investment (FDI) on the unemployment rate (U) in the Kingdom of Saudi Arabia (KSA). Using Ordinary Least Square Model (OLS), the study takes the unemployment rate as a dependent variable, and FDI and Output as two explanatory variables over the period of 2005-2018. The study supports our assumption that the inflows of the FDI and the total output negatively and significantly affect the unemployment rate in the KSA; the inflows of the FDI creates more job opportunities and will reduce the unemployment rate in KSA. Our recommendation is that the KSA government should implement more policies to attract more inflows of “Quality FDI” to attain the maximum goals and to decrease the total unemployment rate.

Suggested Citation

  • Kolthoom Alkofahi, 2020. "The Effect of Foreign Direct Investment on the Unemployment Rate in Saudi Arabia," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 12(10), pages 1-1, October.
    • Handle: RePEc:ibn:ijefaa:v:12:y:2020:i:10:p:1
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    References listed on IDEAS

    as
    1. Moran, Theodore H. & Görg, Holger & Seric, Adnan & Krieger-Boden, Christiane, 2017. "How to Attract Quality FDI?," KCG Policy Papers 2, Kiel Centre for Globalization (KCG).
    2. Alotaibi Mohamed Meteb, 2017. "Unemployment and Economic Growth in Saudi Arabia 2000-2015," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(9), pages 83-93, September.
    3. Haga Elimam, 2017. "Determinants of Foreign Direct Investment in Saudi Arabia: A Review," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(7), pages 222-227, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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