The Impact of Foreign Direct Investment on Economic Growth in the Gulf Cooperation Council: A Generalised Methods of Moments Analysis

Abdullah Almeer ()
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Abdullah Almeer: King Fahd University of Petroleum and Minerals, Accounting & Finance Department

A chapter in Business and Sustainable Development in a Globalized and Digitalized Era, 2026, pp 126-141 from Springer

Abstract: Abstract The Gulf Cooperation Council Countries (GCC, hereafter), which are rich in natural resources, are actively implementing diversification plans to lower oil dependence. This paper examines the role of foreign direct investment (FDI, hereafter) in the GCC countries from 2001 to 2016, using World Bank data. The study controls for endogeneity of FDI and GDP growth by using the system generalized method of moments. The main finding is that FDI has a positive impact on economic growth for all GCC economies; moreover, the effect of FDI is higher when it is conditioned on human capital, highlighting the critical role of education and skills. Our findings underscore the importance of investing in human capital, including education and skills development, to foster the growth of FDI. Hence, our paper offers policymakers in the GCC valuable policy recommendations to support their efforts in diversifying their economies.

Keywords: Foreign Direct Investment; Economic Growth; Gulf Cooperation Council; Human Capital; System GMM (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-032-29346-6_7

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DOI: 10.1007/978-3-032-29346-6_7

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