Impact of Foreign Direct investment in Saudi Arabia
There are times when Country X finds country Y useful to invest its resources. When this investment is long lasting and the investing person gets outstanding results, the two countries usually benefit. In other words, Foreign Direct investment is a way another government, person, company and any interested personnel to invest in another country on a long-term basis Duce & Espa, 2003, p. 2). In order for a country to enjoy the benefits of Foreign Direct Investment, the environment of that country should be conducive to allow the foreigners invest as required. Issues like war, political instability and inflation affect the investors both local and foreign. Therefore, the state should endeavor to analyze the things that may drive investors away and improve on that concept.
Saudi Arabia is found in the middle east, where it boarders the Red Sea and Persian Gulf. People always think of Saudi Arabia as a desert with harsh temperatures and do not look on the developmental side. Though most of Saudi Arabia is a desert, there are certain Areas that can handle good agriculture. The political atmosphere and government structure plays a huge role in determining economic growth of Saudi Arabia. Saudi Arabia is well known for the vast Oil resources it offers other countries (Country profile: Saudi arabia, 2006, p. 14). For example, United States of America is the major oil-consuming nation of Saudi Arabian oil. Other countries include Japan, china and South Korea. Therefore, with the gift of oil, Saudi Arabia has managed to prosper well economically in spite of the extreme temperature that makes agriculture had to pursue. Saudi Arabia has always tried its best to have good relations with other countries to allow meaningful resources to help in extraction of oil and invest more.
However, there have been good and bad news on the political structure of Saudi Arabia that has affected the economy of Saudi Arabia positively and negatively. Throughout this paper, we shall see how the differences and similarities between the competing political party platforms in Saudi Arabia have influenced foreign direct investment in the country.
Saudi Arabia has been an Islam dominated country. It has been ruled by a king ever since it got its independence. With the large vast of oil reserves and other recourses like Natural gas, deposits of gold, bauxite copper, other foreign countries have found Saudi Arabia very important. Countries like USA have managed to collaborate with the country by providing the skilled work force to help in the extraction of the oil. In addition, there are several other investors, who have managed to boost on the countries FDI.
Like any other country, Saudi Arabia has had competing party platforms that have influenced FDI. The government of Saudi Arabia can be described as authoritarian regime as it is dominated absolute monarchy. The King is both head of state and government. The state is also controlled by n constitution, of which before any decision is made the princes of the royal family that head the state must be consulted. In addition, the king’s powers are limited, as he must abide by the religious Islamic rules to govern the country.
There are several political environment of Saudi Arabia does not encourage other political parties. However, some people who are not from the royal family think that there should be reform in allowing other people to take part in the development of the country. For example, among various oppositions of the reigning regime and monarchical state, the Islamic activists have been considered a threat to the royal family. They have always accused the royal family for participating in corrupt deals that benefit the rich in that country. This has attracted issues like violence and terrorism.
According to the Islamic activists, they believe that certain rules like denying women most of the rights in taking active participation in the production was causing chaos in the country. There are things that women were not allowed to do in Saudi Arabia. For example, driving of cars and doing jobs that are designated as male job (Ahmari 2013, para. 3). This situation can be questionable even when female woman investors take part in the investment program. The male in Saudi Arabia will not enjoy the company of a woman to spear head a development project in that society. In addition, such a scenario will be highly questionable if other women from other countries step in to take part as skilled personnel in that company. This means that the organization will be affected and as the local people may decide not to purchase products from that organization as they are not following the constitution and traditions of the country. However, conflicting ideas from other people who are against the decisions made by the royal family may cause several demonstrations that may lead to deaths. The King does not allow such acts. He usually commands the forces responsible to take care of the situation. Death usually occurs and even foreign investors may be victims. These ideologies strongly affect the FDI in Saudi Arabia and leads to a retreat of investors. In the end, this factor will reduce level of economical development in Saudi Arabia.
Another political conflict that has affected the Foreign Direct Investment in Saudi Arabia is the cold war that it has been having with neighboring countries like Iraq. This cold war started as a
Reference List
Ahmari , A. (2013). Manal al-Sharif: The woman who dared to drive. Retrieved March 28, 2013,
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Country profile: Saudi Arabia. (2006). Retrieved March 28, 2013, from
http://lcweb2.loc.gov/frd/cs/profiles/Saudi_Arabia.pdf
Duce, M. & Espa, B. (2003). Definitions of foreign direct investment (FDI): A methodological
note. Retrieved March 28, 2013, from
http://www.bis.org/publ/cgfs22bde3.pdf
Spindle, B. & Coker, M. (2011). The new cold war. Retrieved March 28, 2013, from
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