Do Double Tax Treaties Promote Foreign Direct Investment? An Empirical Analysis of Saudi Arabia (2016–2023)

Abstract

This dissertation examines whether double tax treaties (DTTs) influence foreign direct investment (FDI) flows into Saudi Arabia. While international research has produced mixed results, very little is known about how treaties operate in resource-rich economies with dual tax systems such as Saudi Arabia. Using bilateral FDI data for 124 partner countries between 2016 and 2023, the study applies fixed-effects regression techniques to isolate the impact of treaty implementation while controlling for global and domestic factors. The results indicate that DTTs have heterogeneous effects: treaties with OECD partners are associated with stronger inflows, while treaties with non-OECD partners show limited or insignificant impact. These findings suggest that the effectiveness of DTTs depends on the characteristics of partner countries, rather than treaties operating as a uniform policy tool. The study contributes by extending the literature to a previously under-researched context and provides policy-relevant evidence for evaluating Saudi Arabia’s treaty expansion under Vision 2030.