Why do countries compete to attract foreign companies? And why do they welcome companies from abroad to invest in their markets? The answer may seem simple: to bring in money. But the idea goes beyond that. Countries also seek to benefit from new expertise and technology, create jobs, and develop their economic sectors.

This type of investment is known as foreign direct investment (FDI). It involves an investor from abroad investing in a company or project within a country with the aim of establishing a long-term investment relationship. For example, a foreign company might set up a factory in Saudi Arabia or invest in a local company and take part in its management.

Where does Saudi Arabia stand on this trend?

The Kingdom is seeking to attract more foreign investment as part of its efforts to diversify the economy and increase the contribution of non-oil activities, in line with the goals of Saudi Vision 2030. This includes attracting global companies and encouraging them to enter the Saudi market and take advantage of opportunities in a range of sectors, including industry, technology, and tourism.

But does attracting foreign investment necessarily mean the economy is succeeding?

Not necessarily. Attracting capital is an important indicator, but it is not enough on its own to assess its impact. Imagine that a foreign company invests in building a factory in the Kingdom. The project's impact is not limited to the money the company spends; it also extends to the jobs it creates, the skills it transfers, how much it relies on local suppliers, and the value it adds to the economy.

A country may attract foreign companies, but their impact on the local economy can vary from one project to another. Some may help transfer knowledge, develop supply chains, and create new opportunities for Saudi businesses, while other projects may have a limited impact in these areas.

How do we measure the success of foreign investment?

Several indicators can be considered, including the jobs it creates, the extent to which local companies benefit from its presence, the transfer of technology and knowledge, and its contribution to developing production and exports. The longevity of projects and their ability to generate economic value over the long term are also important factors in assessing their success.

Ultimately, the importance of foreign investment lies not only in the amount of money it brings into a country, but in its ability to turn that money into sustainable economic opportunities. Investment success is measured not just by what it brings today, but by the impact it leaves on tomorrow's economy.