Privatization and Foreign Direct Investment



There is a consensus amongst Saudi economic observers and practitioners that the Kingdom truly needs to make economic reforms work and it can only do so by strengthening the private sector, finding other sources of investment and encouraging repatriation of Saudi capital in viable domestic projects. What then are the obstacles? It is not that Saudi Arabia lacks good intentions or has not set the proper priorities. Rather, there is no matching consensus as to how much action is needed and how quickly it should act. While different economists and government planners might assign different priorities and values to the urgency of the effort needed, most would agree that success will depend on far more progress being made in the following areas: Privatizing key public assets, Attracting more effective foreign direct investment (FDI), Strengthening the private sector in a meaningful manner, Repatriating Saudi capital into domestic projects, Creating meaningful and value-added jobs for the Saudi economy


Private Sector Foreign Direct Investment Saudi Arabia World Trade Organization Arab Country 


  1. Aitken, Brian, Gordon H. Hanson and Ann E. Harrison “Spillovers, foreign investment, and export behaviour”. Journal of International Economics, Vol. 43, pp. 103–132, 1997.CrossRefGoogle Scholar
  2. Bazai, Hamad, Al. “Privatization – A Prelude to Government Projects Reform”. Ministry of Finance and National Economy. Future Vision of Saudi Arabia., Riyahd, 2002.Google Scholar
  3. Bourbakri, N. and Cosset, J. “The Financial and Operating Performance of Newly Privatized Firms: Evidence from Developing Countries”. Mimeo Laval University, 1997.Google Scholar
  4. Buch, C. Kleinert, J. Lipponer, A. Toubal, F. “Determinants and effects of foreign direct investment: evidence from German firm-level data”. Economic Policy, pp. 51–110, January 2005.Google Scholar
  5. Clarke, Thomas (ed.) “International Privatization: Strategies and Practices”. Berlin and New York, NY: Walterde Giruyter, 1994.Google Scholar
  6. Cordesman, A.H. “Saudi Arabia Enters the 21st Century”. New York, NY: Praeger, 2003.Google Scholar
  7. Dagdeviren, M. “Revisiting privatization in the context of poverty alleviation”. Journal of International Development, Vol. 18, pp. 469–488, 2006.CrossRefGoogle Scholar
  8. Fahim, Mohammed, Al. “From Rags to Riches: A Story of Abu Dhabi”. London, Center for Arab Studies, 1995.Google Scholar
  9. Field, Michael. “The Merchants: The Big Business Families of Saudi Arabia and the Gulf States”. Woodstock, N Y: Overlook Press, 1985.Google Scholar
  10. Fisher, G., Hughes, R. Griffin, R. and Pustay, M. “International Business: managing in the Asia-Pacific”, Pearson Education. Australia, 2006.Google Scholar
  11. Harrison, Ann. “Determinants and Consequences of Foreign Investment in Three Developing Countries”, in Mark Roberts and James Tybout, (eds.), Industrial Evolution in Developing Countries. New York, NY: Oxford University Press, 1997.Google Scholar
  12. Helpman, E., Melitz, M.J. and Yeaple, S.R. “Exports versus FDI with heterogeneous firms”, American Economic Review, Vol. 94, No. 1, pp. 300–316, 2004.CrossRefGoogle Scholar
  13. Kemp, R. “Privatization: The Provision of Public Services by the Private Sector,” Jefferson, NC, USA; and London, UK: McFarland & Co., 2007.Google Scholar
  14. Khemani, R.S. “Fostering Diversification and Competitiveness; Strategies and Options for the Kingdom of Saudi Arabia”. World Bank. Future Vision of Saudi Arabia, Riyadh, Oct. 2002.Google Scholar
  15. Kugler, Maurice. “Spillovers from foreign direct investment: Within or between Industries?” Journal of Development Economics, Vol. 80, No. 2. pp. 444–477, 2006.CrossRefGoogle Scholar
  16. Liu, X., Siler, P., Wang, C. and Wei, Y. “Productivity spillovers from foreign direct investment”, Journal of International Business Studies. Third Quarter, pp. 407–425, 2000.CrossRefGoogle Scholar
  17. Megginson, W., Nash, R., and Van Randenborgh, M. “The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis”. The Journal of Finance, Vol. XLIX, No. 2, June 1994.Google Scholar
  18. Saravia, Edgar. “Regulation and Competition”. World Bank. Future Vision of Saudi Arabia. Riyadh, Oct. 2002.Google Scholar
  19. Speakman, John. “Privatization and Private Sector Participation in Infrastructure: A Vision for Saudi Arabia”. World Bank. Future Vision of Saudi Arabia, Riyadh, Oct. 2002.Google Scholar
  20. Wright, Jr. J.W. “Business and Economic Development in Saudi Arabia”, London: Macmillan Press Ltd, 1996.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Department of Finance and EconomicsKing Fahd University of Petroleum and MineralsDhahranSaudi Arabia

Personalised recommendations