Determinants of Resource-Seeking Foreign Direct Investment: Co-Integration and Causality Analysis for Saudi Arabia
Mohammad Hanif Akhtar, Mohammad Bashir Khan, Shahzad Hussain
Journal of Economics, Management and Trade · pp. 468–478 · Published 30 Jul 2013
10.9734/BJEMT/2013/3739Abstract
Although, a vast amount of literature has emerged on determinants of FDI across the globe, yet research in a Saudi Arabian context remains limited. This study is an attempt to fill this gap where determinants of resource-seeking FDI are analyzed over a period of 30 years. The study uses Johansen tests of cointegration to find out the effect of hypothesized variables as determinants of resource-seeking FDI. In order to determine a causal link among the tested variables, a Granger causality test is also conducted. On overall basis, it can be concluded that the resource-seeking FDI in the country is mainly driven by greater trade openness, resilient fiscal performance and existence of greater oil reserves.
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