FOREIGN DIRECT INVESTMENT IN THE KINGDOM OF SAUDI ARABIA: A DIAGNOSTIC ANALYSIS

This study aims to identify the status of Saudi Arabia as a destination for FDI, the factors that attract FDI into Saudi Arabia, and the factors that hinder the flow of FDI into Saudi Arabia. The study covers a period of five years from 2015 to 2019. The study analysis various determinants of FDI: market size, infrastructure, technology adoption, innovation friendliness, productive and diversified labor force, financial infrastructure, taxation, political risk, corruption, and ease of doing business. The study finds that several factors like market size, well-developed infrastructure, a higher degree of technology adoption, innovation-friendliness, the banking system that is well-capitalized and liquid, low corporate taxes, political stability, low transfer risk, low expropriation risk, low levels of corruption, and a stable currency make Saudi Arabia an attractive destination for FDI. At the same time, the low labor market efficiency and the low ranking in ease of doing business makes it less attractive to FDI.

Lasso faces major economic challenges in Ecuador

Significance Lasso has promised to maintain the pro-market policies of the last four years, hoping they will revive Ecuador’s stagnant economy as the effects of the COVID-19 pandemic subside. His approach will be far from universally welcomed. Impacts Lasso's lack of a congressional majority will force him to pursue deals with other parties or resort to executive orders to enact policies. Expropriation risk will remain low given the key role foreign investment has to play in Lasso’s economic recovery plan. Lasso has promised to grant residence permits to Venezuelan immigrants for "humanitarian reasons".

The State Expropriation Risk and the Pricing of Foreign Earnings

We examine the pricing of U.S. multinational firms’ foreign earnings in regard to their risk of expropriation and unfair treatment by the governments of the countries in which their international subsidiaries are located. Using 8,891 firm-years observations during the 2001-2013 period, we find that the value relevance of foreign earnings increases with the improvement of the protection from state expropriation risk in the subsidiary host-countries. Our results are not driven by the earnings management practice, investor distraction, country informativeness, and political and trade relationship of a foreign country with the US. Furthermore, our results are robust to the confounding effects of country factors, measurement error in the variable of the risk of expropriation, influence of private contracting institutions, and endogeneity in the decision of location of subsidiaries.

Rwanda’s Land Policy Reform: Self-Employment Perspectives from a Case Study of Kimonyi Sector

Rwanda’s Land Policy Reform promotes agri-business and encourages self-employment. This paper aims to analyze the situation from a self-employment perspective when dealing with expropriation risk in rural areas. In this study, we conducted a structured survey addressed to 63 domestic units, complemented by focus groups of 47 participants from Kimonyi Sector. The binary logistic regression analysis revealed that having job alternatives, men heading domestic units, literacy skills in English, and owning land lease certificates (p < 0.05) are positively and significantly related to awareness of land expropriation risk. The decision of the head of the domestic unit to practice the main activity under self-employment status is positively influenced by owning a land lease certificate, number of plots, and French skills, while skills in English and a domestic unit’s size have a positive and significant influence on involvement in a second activity as self-employed. Information on expropriation risk has no significant effect on self-employment. The domestic unit survey revealed that 34.9% of the heads of domestic units only have one job, 47.6% have at least two jobs in their everyday life, 12.7% have a minimum of three jobs, and 4.8% are inactive. The focus group synthesis exposed the limits to self-employment ability and facilities.

Exploding the Supply Chain

This chapter describes the relationship between secure patent enforcement, the disaggregation of technology supply chains, and reduced entry barriers in three core segments of the modern innovation economy. The establishment of the Federal Circuit in 1982, coupled with the relaxation of antitrust restrictions on licensing starting in 1977, inaugurated a strong-IP regime that has enabled firms to mitigate the expropriation risk inherent to the transfer and exchange of informational assets. In the biotechnology market, secure patents have facilitated transactions between R&D-intensive start-ups and large pharmaceutical companies that specialize in the testing, production, and distribution functions required to reach market. In certain segments of the semiconductor market, secure patents have facilitated transactions between chip-design firms and “foundries” that specialize in chip production. In certain information-technology markets, secure patents have facilitated IP-licensing structures that promote informational dissemination among a broad population of producers and other intermediate users.

Organizational Effects of Intellectual Property (Macro Level)

This chapter describes how the level of IP protection impacts firms’ choices in organizing the innovation and commercialization process, which in turn influences the structure of the innovation market as a whole. Weak-IP regimes induce firms to adopt “hierarchical” structures that mitigate expropriation risk by locating innovation and commercialization activities within substantially integrated supply chains. Strong-IP regimes restore organizational choice and enable innovators to adopt “entrepreneurial” structures that rely on contractual relationships among firms that specialize in particular innovation or commercialization functions. If hierarchical structures cannot sufficiently mitigate expropriation risk, then innovation markets will adopt “bureaucratic” structures that rely on tax-based or philanthropic funding. Even when markets adapt to weak-IP regimes by adopting hierarchical structures, or hybrid hierarchical and semi-bureaucratic structures, that support robust R&D investment, efficiency losses will arise to the extent that entry by entrepreneurial innovators is suppressed and the selected mix of innovation projects is distorted.