An empirical investigation on the effects of the fiscal and monetary policies on the domestic and foreign direct investment in Saudi Arabia for the period 2010–2018

Foreign direct investment is currently one of the main pillars in achieving development and economic growth, due to its important position in the economies of the countries of the world. The aim of this research is to study the impact of Fiscal and monetary policy in Saudi Arabia on attracting foreign investment for the period 2010–2018. The researcher used the multiple linear regression to test the research hypothesis. Linear regression is used to investigate the impact values by each predictor variable. The study covered the period 2010–2018, the present study chose independent variables monetary policy tools in Saudi Arabia that include (Money supply (M2), Monetary cash reserve and Exchange rate), also the present study chose fiscal tools that include (taxation and government capital spending). The Dependent Variables includes (Direct Domestic Investment and Foreign Direct Investment). E-views (version 10) software package was utilized for this purpose. Multiple linear regression was performed to test models. The results show that Money supply, Monetary cash reserve, capital government spending and taxation positively affects the domestic investments, while Exchange rate negatively affects the domestic investments. It was also found that all independent variables positively affect the foreign direct investment.

The pursuit of developing countries, including Saudi Arabia, to create an investment climate and increase the attractiveness of investment requires the government to formulate carefully studied economic policies with continuous follow-up in order to ensure the achievement of the objectives set .
What is the impact of Fiscal and monetary policy in Saudi Arabia on attracting foreign investment? The following sub-questions emerge : • Has the Kingdom achieved tangible results through measures related to monetary and fiscal policy instruments? • Which policies are most effective in attracting FDI to the Kingdom?

Literature review
Several studies were written in the theoretical side of the issue of fiscal and monetary policy, but a few take the construction of statistical models that explain this relationship and analyze it, as there is no study that relates this relationship to KSA, hereinafter a brief overview of the most important of these studies: • Qadri Nuriya, a. Silent Fatima Zahra (2018) "The impact of fiscal and monetary policy on foreign direct investment in Algeria during the period 1990 -2016". the research has attempted to study the impact of fiscal and monetary policy on FDI inflows in Algeria during the period 1990/2016 in which it relied on the ARDL model. A range of variables, including government spending, taxes, monetary mass, exchange rate and rediscount rate, have been found to show that government spending and monetary mass contribute to increased foreign investment flows while the exchange rate has limited and minimal effects. Taxes and re-discount rates have an adverse effect on foreign investment flows in Algeria. • Abdelhak, Tair Oqba, (2017) "The effectiveness of fiscal policy in attracting foreign direct investment in Algeria" This study aims to measure the effectiveness of fiscal policy in attracting foreign direct investment in Algeria during the period  by focusing on the index of processing expenses from the expenditure side, and the index of revenues (taxes) by taxes. To achieve a positive and significant relationship at the 5% level between the index of FDI flow and the index of processing expenditures in the long term. There is an inverse and significant correlation at the 5% level between FDI and Revenue Indicators . • PAUL NDUBUISI, KALU (2016), "Government Policy and Foreign Direct Investment Inflows into Nigeria" This study identifies an empirical study of the role of government policy. Particularly in the areas of cash and finance in determining FDI flows in Nigeria . Data on the study were collected from secondary sources and analyzed using the multiple regression method, Johansen's co-integration and error correction mechanisms. The results revealed that there is a negative relationship between FDI and policy variables: inflation rate, foreign exchange rate, government fiscal deficit / surplus, as well as the political risk factor. Based on empirical results. • Mustafa Khalifa Thawadi El. Hamoudi (2016), "The Impact of Fiscal Policy on Investment in Libya (2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)" The study covers the period 2000-2015 and it selects the multiple regression model in a study to evaluate the effect of the fiscal policy on the investment spending by using the gross domestic product, the government spending. In this study, some of the related literature has been discussed and it has been done under three subtitles: a theoretical, experimental and analytical review and study. The study shows that the gross domestic product has a positive effect on the investment spending in Libya and growth in gross domestic product (GDP) will lead to the expansion of investment spending in Libya during the study period (2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015). . This study chose the independent variables of monetary policy instruments which include (rediscount rate, mandatory reserve and the open market process). This study also chose financial instruments including government capital expenditures, because they play a big role in the Jordanian economy, the data was analyzed using simple / multiple linear regression method. A negative correlation between the discount rate and the local investment, but it is not statistically significant, while there is a positive and statistically significant relationship between the mandatory cash reserve and the local investment, due to the existence of excess cash reserves in banks in Jordan. There is a positive correlation between government capital spending and domestic investment, which means that fiscal-political effectiveness is greater than that of monetary policies in influencing domestic investment. The second study shows the impact of fiscal and monetary policy on foreign direct investment, and the study showed a statistically negative relationship between the rate of rebate and foreign direct investment, while showed that there is a positive relationship between taxes and foreign direct investment, the reason is that the government gives tax exemptions to encourage foreign direct Global Journal of Economics and Business, 9(3) (2020), 696-705 698 investment. This study recommends the adoption of a policy of moral persuasion to guide banks to strengthen their role in domestic investment, as well as the need for fiscal policy in Jordan that provides tax exemptions to encourage domestic investment. • Mohamed Lahcen Allawi, Karim Brousha, (2015), "The impact of monetary and fiscal policy on the flows of foreign direct investment in Algeria." The objective of this study is to show the effect of monetary and fiscal policy on FDI inflows to Algeria during 1996-2012, using the self-regression model (VAR. Independent variables). Exchange (as monetary policy variables) and fiscal policy (public expenditures) were selected, and the dependent variable was the value of FDI incoming to Algeria. The results show that there is a one-way causal relationship between public expenditure, money mass and discount rate. As well as foreign investment flows in addition, the results show that there is an explanatory power of public expenditure and the monetary mass explaining the change in the value of foreign investment. In general, the results show that there is a positive and significant impact of monetary and fiscal policy on foreign direct investment. Economic . , the researchers found that as spending increases, the fiscal multiplier in the short term will increase at a rate of (0.70), while it was found that the rate is (-0.66) in the case of increasing taxes and the social security contribution.

• Joshua A. Bello, (2005) " Fiscal Policy and FDI Growth in Sub-Saharan Africa (Selected Countries Ghana, South
Africa, Kenya and Nigeria)". This study assesses the impact of fiscal policy on FDI in sub-Saharan Africa, focusing on selected countries: Ghana, Kenya, Nigeria and South Africa. The study also examines the possibility of expanding FDI in sub-Saharan Africa's economies, including identifying factors (financial or non-financial) that contribute to FDI growth in the region over the long term. This study attempts to contribute to discussions focused mainly on tax incentives. In sub-Saharan Africa, the potential benefits of acquiring the knowledge that these countries hope to acquire and how to achieve it. The study has used the (LMTS) and time series to estimate and analyze historical data for four countries. A choice that represents sub-Saharan Africa for 23 years  The regression results in the combined time series show no evidence that financial incentives have attracted investment to sub-Saharan Africa as a region, but there are differences among nations in the region. Human capital and market size are the most important determinants of FDI growth in Global Journal of Economics and Business, 9(3) (2020), 696-705 699 sub-Saharan Africa, supporting previous studies that human capital is essential for technology transfer and promotion of FDI growth. Political stability has also been found to be very important for FDI growth in sub-Saharan Africa, but deficits and tax rates have a negative impact on FDI. Sub-Saharan African governments should review their positions on offering fiscal incentives to boost FDI growth in the region. Sub-Saharan African countries should invest in their people, and policymakers may need to use more dynamic and more consistent policies Technology . The following table summarizes these studies and its results   no evidence that financial incentives have attracted investment to sub-Saharan Africa as a region, but deficits and tax rates have a negative impact on FDI Source: Author studies what distinguishes this study over the above studies is the period that the current study based upon (2010-2018), moreover that this study used statistical quantitative methods and inferential statistics topics, including the hypotheses that were not used by most of the studies mentioned above, making the current research results are of great reliability, because it depends on testing using of sound scientific methods.

Research Methodology
The study covered the period 2010-2018, the present study chose independent variables monetary policy tools in Saudi Arabia that include (Money supply), Monetary cash reserve and Exchange rate), also the present study chose fiscal tools that include (taxation 1  • Exchange rate In Saudi Arabia, the exchange rate plays a crucial role in monetary policy. It is an important variable for price stability and the balance of payments. Intervention policy under the fixed exchange rate regime is influenced by the level of foreign exchange outflow and the dollar/riyal interest rate differential. This will have direct effects (due to interest arbitraging) and indirect effects (via current account deterioration) on Saudi Arabia's foreign exchange reserves. With perfect asset substitutability, a small change in interest rates results in a large change in reserves, reflecting the general point that there cannot be an autonomous monetary policy in a fixed exchange rate system with perfect asset substitutability. 2. The fiscal Tools: • Taxation Saudi Arabia's direct taxation system includes income tax, withholding tax and zakat, include taxes imposed on income, profits, taxes on financial transactions, taxes on goods and services, taxes on trade and international transactions • capital government spending refers to expenses that are allocated for the purchase of long-lived assets to create and increase money-kind, example: new construction, maintenance and major repairs are very effective tools in influencing economic growth Dependent Variables 1. Direct Domestic Investment: It is the spending on fixed capital goods in addition to the change in inventory.

Foreign Direct Investment:
term as an investment by an investor or enterprises in another enterprises or equivalent in order to get voting power or control by other means outside their geographical boundaries with the target to achieve the investment share and to maximize return Global Journal of Economics and Business, 9(3) (2020), 696-705 701 Multiple linear regression used to test the research hypothesis. Linear regression used to investigate the impact values by each predictor variable. E-views (version 10) software package was utilized for this purpose. The source of the data used in the present study is the data base of Ministry of Finance, Saudi Arabian Monetary Agency, IMF, and World Investment Report.

Research Hypotheses
Depending on the literature review and economic theory, the present study founds the following alternative Hypotheses:

H1
There is a negative impact at (0.05) level for Money supply on domestic investment H2 There is a negative impact at (0.05) level for Monetary cash reserve on domestic investment H3 There is a negative impact at (0.05) level for Exchange rate on domestic investment H4 There is a negative impact at (0.05) level for taxation on domestic investment H5 There is a positive impact at (0.05) level for capital government spending on domestic investment H6 There is a negative impact at (0.05) level for Money supply on foreign direct investment H7 There is a negative impact at (0.05) level for Monetary cash reserve on foreign direct investment H8 There is a negative impact at (0.05) level for Exchange rate on foreign direct investment H9 There is a negative impact at (0.05) level for taxation on foreign direct investment H10 There is a positive impact at (0.05) level for capital government spending on foreign direct investment Hypothesis Testing: The researcher used the multiple linear regression to test the research hypothesis. Linear regression is used to investigate the impact values by each predictor variable. E-views (version 10) software package was utilized for this purpose. The margin error was set in the current research to 0.05. The results were submitted according to the number of dependent variables being involved.

Testing the impact on the domestic investments (DI)
Multiple linear regression was performed to test for the first model which handles the domestic investments as a dependent variable. The results are included in the following table.  Table (2) indicates the results of estimating the first model adopted by this research which expressed by the domestic investments (per year) as a dependent variable and the other independent variable mentioned earlier.
The data were expressed annually within the period (2010 -2018). According to the results the f value (1040.238) was considered to be statistically significant as the associated probability value was (0.000961) < 0.05 concluding the model is accepted statistically. Further the adjusted coefficient of determination (explanation) was (0.998655), this value expresses a high percentage of explanation of the variation in the domestic investments by the predictors being used by the model. Concerning the serial auto correlation, the DW test was used, the test result was (2.264784) reflecting no auto correlation issues could be reported as the test value was around the desired reference value (2) and within the range (1.50 -2.05). the prediction equation for this model was in the form: Further the researcher forecasted the values of the domestic investments during the period (2010 -2017), to test for stability in the DI, it was obvious that the bias proportion value was (0.000000) and that the variance proportion was (0.000096) which is very small amount and that the covariance proportion value was (0.999904) which represents a good indication (almost to 1), the results are presented in the following chart.  (1) indicate the impact value for money supply was (0.057985), once this value was a positive, we conclude that money supply positively affects the domestic investments (opposite to the research assumption) such that an increase of (0.057985) by the money supply will lead to an increase by (1.000) in the domestic investments.
The impact value was tested for statistical significance. T-test was used. As could be figured out from the results provided by the table the p value was (0.5022). When comparing this value with the margin error being used in the current research (0.05) obviously this p value was > 0.05 suggesting that the observed impact value was considered to be statistically not significant. As a result, this hypothesis was rejected. H2: There is a negative impact at (0.05) level for Monetary cash reserve on domestic investment The results of multiple linear regression presented by table (1) indicate the impact value for monetary cash reserve was (4.672501), once this value was a positive, we conclude that money supply positively affects the domestic investments (inverse to what we postulate) such that an increase of (4.672501) by the monetary cash reserve will lead to an increase by (1.000) in the domestic investments.
The impact value was tested for statistical significance. T-test was used. Relying on the probability provided by the table the p value was (0.0725). When comparing this value with the margin error being used in the current research (0.05), obviously this p value was > 0.05 suggesting that the observed impact value was considered to be statistically not significant. As a result, this hypothesis was rejected. H3: There is a negative impact at (0.05) level for Exchange rate on domestic investment The results of multiple linear regression presented by table (1) indicate the impact value for Exchange rate was (-4975.829), once this value was a negative, we conclude that Exchange rate negatively affects the domestic investments (aligned with the assumption) such that a decrease of (-4975.829) by the Exchange rate will lead to a decrease by (1.000) in the domestic investments.
The impact value was tested for statistical significance. T-test was used. Relying on the probability provided by the table the p value was (0.0462). comparing this value with the margin error being used in the current research (0.05), obviously this p value was < 0.05 suggesting that the observed impact value was considered to be statistically significant. As a result, this hypothesis was accepted and that the impact direction was negative by the shown value. H4: There is a negative impact at (0.05) level for taxation on domestic investment The results of multiple linear regression presented by table (1) illustrate the impact value for taxation was (0.319609), once this value was a positive, we conclude that taxation positively affects the domestic investments (on the contrary of our assumption) such that an increase of (0.319609) by the taxation will lead to an increase by (1.000) in the domestic investments.
The impact value was tested for statistical significance. T-test was used. Relying on the probability provided by the table the p value was (0.0743). Comparing this value p value with the margin error being set in the research (0.05), obviously this p value was > 0.05 suggesting that the observed impact value was considered to be NOT statistically significant? As a result, this hypothesis was rejected.
Global Journal of Economics and Business, 9(3) (2020), 696-705 703 H5: There is a positive impact at (0.05) level for capital government spending on domestic investment The results of multiple linear regression presented by table (1) indicate the impact value for capital government spending was (-0.396683), once this value was a negative, we conclude that capital government spending negatively affects the domestic investments (inverse of the research assumption) such that a decrees of (-0.396683) by the capital government spending will lead to a decrease by (1.000) in the domestic investments.
The impact value was tested for statistical significance. T-test was used. Relying on the probability provided by the table the p value was (0.0215). When comparing this value with the margin error being used in the current research (0.05), obviously this p value was < 0.05 suggesting that the observed impact value was considered to be statistically significant. As a result, this hypothesis was accepted and that the impact direction was negative by the shown value.
3. testing the impact on the foreign direct investments (DI) Multiple linear regression was performed to test for the second model which handles the foreign direct investments as a dependent variable. The results are included in the following table  Table (3) indicates the results of estimating the second model adopted by this research which expressed by the foreign direct investments (per year) as a dependent variable and the other independent variable mentioned earlier. The data were expressed annually within the period (2010 -2018). According to the results the f value (197.4806) was considered to be statistically significant as the associated probability value was (0.005046) < 0.05 concluding the model is accepted statistically. Further the adjusted coefficient of determination (explanation) was (0.992925), this value expresses a high percentage of explanation of the variation in the domestic investments by the predictors being used by the model. Concerning the serial auto correlation, the DW test was used, the test result was (2.111643) reflecting no auto correlation issues could be reported as the test value was around the desired reference value (2) and within the range (1.50 -2.05).
Further the researcher forecasted the values of the foreign direct investments during the period (2010 -2017), to test for stability in the FDI, it was obvious that the bias proportion value was (0.000000) and that the variance proportion was (0.000506) which is very small amount and that the covariance proportion value was (0.999494) which represents a good indication (almost to 1), the results are presented in the following chart.   (3) indicate the impact value for money supply was (-0.062063), once this value was negative, we conclude that money supply negatively affects the foreign direct investments (the same as we assume in this research) such that a decrease of (-0.062063) by the money supply will lead to a decrease by (1.000) in the foreign direct investments.
The impact value was tested for statistical significance. T-test was used. As could be figured out from the results provided by the table the p value was (0.0919). Comparing this probability value with the margin error being used in the current research (0.05) obviously this p value was > 0.05 suggesting that the observed impact value was considered to be statistically not significant. As a result, this hypothesis was rejected. H7: There is a negative impact at (0.05) level for Monetary cash reserve on foreign direct investment The results of multiple linear regression presented by table (3) indicate the impact value for monetary cash reserve was (0.407225), once this value was a positive, we conclude that money supply positively affects the foreign direct investments (inverse to what we postulate) such that an increase of (0.407225) by the monetary cash reserve will lead to an increase by (1.000) in the foreign direct investments.
The impact value was tested for statistical significance. T-test was used. Relying on the probability provided by the table the p value was (0.3932). Putting this value in comparison with the margin error being set in the current research (0.05), obviously this p value was > 0.05 suggesting that the observed impact value was considered to be statistically not significant. Accordingly, this hypothesis was rejected. H8: There is a negative impact at (0.05) level for Exchange rate on foreign direct investment The results of multiple linear regression presented by table (3) indicate the impact value for Exchange rate was (-925.2606), once this value was a negative, we conclude that Exchange rate negatively affects the foreign direct investments (aligned with the assumption) such that a decrease of (925.2606) by the Exchange rate will lead to a decrease by (1.000) in the foreign direct investments.
The impact value was tested for statistical significance. T-test was used. Relying on the probability provided by the table the p value was (0.0985). Comparing this value with the margin error being used in the current research (0.05), obviously this p value was > 0.05 suggesting that the observed impact value was considered to be statistically not significant? consequently this hypothesis was rejected. H9: There is a negative impact at (0.05) level for taxation on foreign direct investment The results of multiple linear regression presented by table (3) illustrate the impact value for taxation was (-0.097487), once this value was a negative, we conclude that taxation negatively affects the foreign direct investments (on the contrary of our assumption) such that a decrease of (-0.097487) by the taxation will lead to a decrease by (1.000) in the foreign direct investments.
The impact value was tested for statistical significance. T-test was used. Relying on the probability provided by the table the p value was (0.0651). Comparing this value p value with the margin error being set in the research (0.05), obviously this p value was > 0.05 suggesting that the observed impact value was considered to be NOT statistically significant? As a result, this hypothesis was rejected. H10: There is a positive impact at (0.05) level for capital government spending on foreign direct investment The results of multiple linear regression presented by table (3) indicate the impact value for capital government spending was (-0.025429), once this value was a negative, we conclude that capital government spending negatively affects the foreign direct investments (inverse of the research assumption) such that a Global Journal of Economics and Business, 9(3) (2020), 696-705 705 decrees of (-0.025429) by the capital government spending will lead to a decrease by (1.000) in the foreign direct investments.
The impact value was tested for statistical significance. T-test was used. Relying on the probability provided by the table the p value was (0.2682). this value was > 0.05 the margin error being used in the current research, suggesting that the observed impact value was considered to be not statistically significant. As a result, this hypothesis was rejected.

Conclusions
The aim of this research is to study the impact of Fiscal and monetary policy in Saudi Arabia on attracting foreign investment for the period 2010-2018. The researcher used the multiple linear regression to test the research hypothesis. Linear regression is used to investigate the impact values by each predictor variable.
Multiple linear regression was performed to test for the first model which handles the domestic investments as a dependent variable. The results show that Money supply, Monetary cash reserve, capital government spending and taxation positively affects the domestic investments, while Exchange rate negatively affects the domestic investments, this means that the effectiveness of most of the tools not influencing domestic investment.
Multiple linear regression was performed to test for the second model which handles the foreign direct investments as a dependent variable. The results show that all independent variables positively affects the foreign direct investment. This is due to the large amount of tax exemptions imposed on investors in order to encourage foreign investment, in addition to the state's adoption of infrastructure, services and education projects, which weakens the impact of (government spending) on foreign direct investment.
The study recommends the necessity to follow an encouraging policy for local banks to increase their role in investing locally.