Meghana Munamarty

Leveraging Foreign Direct Investment to Develop Saudi Arabia's Digital Economy: Progress, Challenges, and Policy Priorities under Vision 2030

Started Sept. 7, 2023

Abstract or project description

Saudi Arabia aims to diversify its economy and reduce dependence on oil revenues through Vision 2030. Developing the digital economy by attracting foreign direct investment (FDI) is a key strategy. This paper provides one of the first in-depth empirical assessments of Saudi Arabia's effectiveness in leveraging FDI to develop its digital economy under Vision 2030. Quantitative analysis examines the relationship between increased FDI and growth in indicators like information technology exports and share of non-oil GDP. The results show modest contributions so far from FDI to economic diversification, with most foreign investment still concentrated in the oil and gas sectors. Substantial acceleration of technology-focused FDI is needed for Saudi Arabia to achieve its ambitious Vision 2030 goals by 2030. Detailed policy recommendations focused on incentives, promotion strategies, business climate reforms, and human capital development to amplify digital economy FDI. The paper also provides expanded benchmarking against regional digital hubs like the UAE and Qatar. Customized strategies tailored to high-potential sectors where Saudi Arabia can differentiate itself competitively are recommended based on its unique assets.