The Impact of Digitalization on FDI Inflows in Saudi Arabia

Abstract

Aim: This study investigated the impact of digitalization on foreign direct investment (FDI) inflows in Saudi Arabia. m Methods: The study identified critical digitalization and institutional factors and hypothesized their influence on FDI inflows to Saudi Arabia. Multiple linear regression analysis using the Ordinary Least Squares (OLS) method was conducted on data from 1997 to 2022, utilizing SPSS. Results: The outcomes revealed that digital infrastructure and government policy positively and significantly explain the FDI inflows in Saudi Arabia. The null hypothesis was rejected, indicating that effective digitalization and supportive government policy contribute to FDI inflows. Conclusion: The study concluded that internet access, mobile phone usage, and favorable government policies are key factors in attracting FDI inflows into Saudi Arabia. Recommendations: Policymakers should prioritize developing and implementing comprehensive digitalization strategies and regulations to improve digitalization and business-related institutions, raise the standard of digital transformation, and improve the regulatory environment framework to encourage more inward FDI inflows.