Foreign Direct Investment, Financial Development and Economic Growth Evidence from Saudi Arabia

  • Nasir N
  • Rehman M
  • Ali N
N/ACitations
Citations of this article
28Readers
Mendeley users who have this article in their library.

Abstract

This study is an effort to explain and establish a relationship among foreign direct investment, financial development and economic growth in Saudi Arabian context for the period of 1970 to 2015 by employing Vector Auto Regression (VAR) and modified Granger Casualty Models. The result of Johansen co-integration test illustrates that no long run co-integration can be established among the variables. VAR has established a link between economic growth, financial development and foreign direct investment. The Granger causality test also confirms that economic growth causes foreign direct investment and financial development which is a unidirectional causality running from economic growth towards foreign direct investment and financial development. No significant causality can be observed empirically between foreign direct investment and financial development. This feature can be attributed to the fact that Saudi Arabian economy is still heavily dependent on its oil resources which is the driving force behind growth. Impulse Response Function has been utilized in order to observe the response to the shocks among the variables.

Cite

CITATION STYLE

APA

Nasir, N. M., Rehman, M. Z., & Ali, N. (2017). Foreign Direct Investment, Financial Development and Economic Growth Evidence from Saudi Arabia. International Journal of Financial Research, 8(4), 228. https://doi.org/10.5430/ijfr.v8n4p228

Register to see more suggestions

Mendeley helps you to discover research relevant for your work.

Already have an account?

Save time finding and organizing research with Mendeley

Sign up for free