Facilitating Clean Energy Foreign Direct Investment in Emerging Economies: Institutional Strategy and Reform in Saudi Arabia

Abstract

This study investigates the institutional strategies shaping foreign direct investment (FDI) in Saudi Arabia’s Clean Energy (CE) sector, aligned with Vision 2030. Despite recent reforms enhancing legal frameworks and investor incentives, challenges such as fragmented inter-agency coordination and regulatory ambiguity persist. Using a mixed-methods approach; surveys, semi-structured interviews and a comparative case study of Singapore’s Economic Development Board the research identifies both institutional strengths and gaps. Findings show that Saudi institutions adopt multi-pronged FDI strategies, including risk-sharing mechanisms, evolving legal tools and varied entry modes. However, changes in policies and challenges in inter-agency integration limit their impact. In contrast, Singapore’s model highlights the benefits of centralised governance, coherent policy and investor-oriented structures. This study contributes to the literature by framing institutions as strategic managers of FDI, particularly in high-risk, capital-intensive sectors like CE. It recommends enhancing institutional capacity through a dedicated CE FDI authority, more flexible localisation policies and structured investor feedback channels. These reforms can help position Saudi Arabia as a more competitive, sustainable CE investment hub.