Foreign Direct Investment and Growth: A Study in the Context of Kuwait

Abstract

Foreign Direct Investment is considered an encouraging impetus for economic development of an economy by enhancing competitiveness through offering employment, transferring sophisticated technologies, boosting productivity and promoting infrastructure, etc. In the recent times, the downtrend of oil prices has affected adversely the GDP of GCC regions as revenue from oil has been major source of inflow of funds for them. This economic turmoil has caused a serious concern among these countries and attracted immediate attention of the government and policy makers. This has led the members to focus on non-oil units in order to get revenues by promoting FDI, abolishing subsidies, proposal to impose tax, cost cutting and downsizing of employment especially in public sectors to accentuate the drivers of growth. Kuwait is not an exception to it. In the light of above mentioned facts, present study examines the role of FDI to the economic rise of Kuwait. Here, the trends of FDI and GDP in GCC have been explained in general; and for Kuwait, in particular. The statistical tools such as correlation, Analysis of Variance (ANOVA) and regression have been employed to glean the desired results. The result shows a positive relationship between FDI and GDP of Kuwait.