Foreign Direct Investment & Its Contribution to Economic Growth: A GCC Perspective

Abstract

Foreign Direct Investment (FDI) serves as a primary indicator for the Gulf Cooperation Council (GCC) countries, Kuwait, Bahrain, Qatar, Saudi Arabia, Oman, and the United Arab Emirates in their pursuit of sustainable economic growth. The GCC countries recognize the significance of foreign direct investment (FDI) in addressing the volatility of the oil market and fostering economic diversification. This is the rationale for its use in promoting development via foreign direct investment (FDI). This study aims to analyze the effects of foreign direct investment (FDI) on GDP growth, employment growth, and sectoral business expansion in the domestic economy. This study examines the impact of institutional advancements and regulatory frameworks on the ability of foreign direct investments (FDIs) to promote sustainable development. In 2023, the GCC attracted $47 billion in foreign direct investment (FDI); however, it continued to face challenges such as spillover effects, sluggish job growth, and barriers to private sector expansion. This research combines quantitative economic data with qualitative analysis of institutional policies to investigate the key factors affecting FDI effectiveness across the region. This study indicates that GCC states ought to implement investment promotion programs that are consistent with sustainable development goals and undertake specific policy reforms to enhance foreign direct investment strategies for developmental advantages.