Foreign Direct Investment
Factors Affecting Foreign Direct Investment Location in the Petrochemicals
Industry, the case of Saudi Arabia
By
Fawaz Binsaeed
0531820
BBS Doctoral Symposium 23rd & 24th March 2009
1
Factors Affecting Foreign Direct Investment Location in the Petrochemicals Industry,
The case of Saudi Arabia
Abstract
Foreign Direct Investment (FDI) is an important source of capital and economic growth in developing countries. It provides a package of new technologies, management techniques, finance and market access for the production of goods and services. However, attracting FDI is a major challenge for host countries as it faces the challenge of identifying the major factors that motivate and affect the FDI location decision. After reviewing the literature we identify the most important major location factors for FDI, which are the cost factors, market factors, infrastructure and technological factors, political and legal factors, and social and cultural factors. However, the previous studies lack the focus on the complexity of the relative important of the location factors to a specific industry and specific country. Therefore, this study will fill the previous studies gaps by studying the relative important of location factors to the
Petrochemicals FDI located in Saudi Arabia
Literature review
There has been a considerable literature on the determents of location factors for
Multinational Corporations (MNCs) when they choose their foreign market location, but very little on the relative important of the location factors for FDI in specific country and industry.
It is widely believed that the trend towards globalize production and marketing has major implications for developing countries ' attractiveness to FDI. The boom of FDI flows to
2
developing countries since the early 1990s indicates that multinational enterprises have increasingly considered these host countries to be profitable investment locations. At the same
time,
Industry, the case of Saudi Arabia
By
Fawaz Binsaeed
0531820
BBS Doctoral Symposium 23rd & 24th March 2009
1
Factors Affecting Foreign Direct Investment Location in the Petrochemicals Industry,
The case of Saudi Arabia
Abstract
Foreign Direct Investment (FDI) is an important source of capital and economic growth in developing countries. It provides a package of new technologies, management techniques, finance and market access for the production of goods and services. However, attracting FDI is a major challenge for host countries as it faces the challenge of identifying the major factors that motivate and affect the FDI location decision. After reviewing the literature we identify the most important major location factors for FDI, which are the cost factors, market factors, infrastructure and technological factors, political and legal factors, and social and cultural factors. However, the previous studies lack the focus on the complexity of the relative important of the location factors to a specific industry and specific country. Therefore, this study will fill the previous studies gaps by studying the relative important of location factors to the
Petrochemicals FDI located in Saudi Arabia
Literature review
There has been a considerable literature on the determents of location factors for
Multinational Corporations (MNCs) when they choose their foreign market location, but very little on the relative important of the location factors for FDI in specific country and industry.
It is widely believed that the trend towards globalize production and marketing has major implications for developing countries ' attractiveness to FDI. The boom of FDI flows to
2
developing countries since the early 1990s indicates that multinational enterprises have increasingly considered these host countries to be profitable investment locations. At the same
time,
References: Buckley, Peter J.; Devinney, Timothy M.; Louviere, Jordan J. (2007) Do managers behave the way theory suggests? A choice-theoretic examination of foreign direct investment location decision-making. Journal of International Business Studies, 1238:7, 1-26. Dunning, J.H. (1999), A Rose By Any Other Name? FDI Theory in Retrospect and Prospect, Mimeo, University of Reading and Rutgers University. Globerman,S. and Shapiro, D.M. (1999) The impact of government policies on foreign direct investment: the Canadian experience Kokko (2002), Globalization and Foreign direct investment Incentives, Paper Presented at Annual Bank Conference on development Economics in Europe, Oslo, Mimeo. Shapiro, D. and S. Globerman (2001) National Infrastructure and Foreign Direct Investment, Mimeo, Simon Fraser University UNCTAD, World Investment Report (1996): Incentives and Foreign Direct Investment, New York and Geneva: United Nations. UNCTAD, World Investment Report (1998): Trends and Determinates New York and Geneva: United Nations. UNCTAD, World Investment Report (2006): Incentives and Foreign Direct Investment, New York and Geneva: United Nations.