GRM 2010 GRM 2011

Abstract Details

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A comparative study of policy and regulatory frameworks related to inward and outward direct investment in the Kingdom of Saudi Arabia
Paper Proposal Text :
Outward Foreign Direct Investment (OFDI), once a phenomenon connected with the developed countries is now a growing trend in the developing countries, particularly developing countries from Asia. The Kingdom of Saudi Arabia is one of those countries where an increasing outward Foreign Direct Investment is undertaken. Despite the significance of this issue to the Kingdom, nevertheless, very little research has been conducted regarding OFDI from Saudi Arabia in order to capture it both conceptually and empirically as it has been revealed by the literature review.
Under the current investment regulatory framework in Saudi Arabia, there is no authority to regulate the facilitation of outward investment. Therefore, a gap emerges which positions outward investment outside the Saudi policy and regulatory investment framework of the 2000 Foreign Investment Law. Despite the lack of regulatory coverage, outward investments from Saudi Arabia have witnessed a remarkable progress
This paper will demonstrate the ability of Saudi economy to rely equally on inward and outward investment as policy instruments which will assist in creating an environment encompassing stability and certainty in domestic and international trade. It also will explain the potential role and function of the Saudi government in the formulation of a policy and regulatory framework for the promotion of outward investment from both public and private operations in Saudi Arabia.
In addition, the research undertakes a case study as an example of investing abroad in agriculture. The case showed some urgent needs to secure food for the Kingdom due to several factors such as scarcity of water resources and arable land. Due to population increase, there is a higher demand for food leading to higher prices. Moreover, the foreign agricultural investment will support and strengthen political relations and therefore it should be used as an instrument of foreign policy. In 2009 the authorities launched the King Abdullah Initiatives for Saudi Agriculture Investments abroad, which provides incentives to Saudi firms to invest in farming in around 35 foreign countries, in particular those in Africa, Eastern Europe and East Asia. Coupled with initiative targets eight agriculture products, and the government has allocated around $22.1bn of funding towards the plan.
The research methodology used for this paper is a qualitative approach using interviews, and focusing on a single case study with international involvement, from Saudi Arabia to fulfil the objectives of this research: a) to determine any inhibiting factors which curtail outward flow of FDI from Saudi Arabia; b) to ascertain the role of the Saudi government in promoting outward direct investment as policy in Saudi Arabia, and c) to test and verify the functioning of outward flow of FDI from KSA.