The Relationship between Sovereign Credit Ratings and Foreign Direct Investment: A Comparative Study with a Focus on Saudi Arabia

Abstract

This study examines the relationship between sovereign credit ratings and foreign direct investment inflows across a sample of countries, namely Germany, the United Kingdom, Saudi Arabia, India, and Rwanda, during the period from 2015 to 2024. The study adopts a comparative descriptive approach and uses the Pearson correlation coefficient to measure the strength and direction of the linear associations between the variables without testing for causality. The results generally show a weak correlation between sovereign credit ratings and foreign direct investment flows, with variation between countries during the study period, especially during periods of global economic and geopolitical uncertainty.