Abstract: In light of Saudi Arabia's economic diversification, this research investigate how Foreign Direct Investment (FDI) and technology spillovers can affect firm level productivity. It relies on panel data from 73 non-financial firms listed on the Tadawul Stock Exchange for the period of 2015-2024. Using the GGM method of moments, this study is conducted using a dynamic panel approach. Unit root and cointegration studies demonstrate that there is a consistent long-term connection between productivity, FDI, and various spillover effects. The research indicates that FDI, vertical spillovers, investment in R&D, stability of exchange rates, firm characteristics such as age and size, export intensity or leverage, all have a positive impact on Total Factor Productivity (TFP). The research highlights the distinction between TFP determinants and labor productivity, concluding that horizontal spillovers may enhance technological efficiency, but not overall output per worker. The combination of GMM estimation and cointegration analysis is a reliable method for resource-dependent economies, although alternative methods may be less effective. From a political perspective, the findings emphasize that expanding vertical relationships, building domestic R&D capabilities, and encouraging innovation to foster better utilization of FDI inflows are crucial.

Keywords: Foreign direct investment, technological spillovers, total factor productivity, labour productivity, sustainable development

Pages: 1004-1017