THE EFFECTIVENESS OF FISCAL POLICY IN ATTRACTING FOREIGN DIRECT INVESTMENT(LIBYA CASE STUDY)
The primary goal of this study was to examine the role of fiscal policy in stimulating and attracting foreign investment to Libya from 1990 to 2020, specifically through its components of investment spending policy, tax policy, and general budget balance.The role of tax policy through the stimulus provided to investors to invest their capital, and the analytical, descriptive, and standard approach have been relied upon as they are the appropriate approaches for the nature and requirements of the study, Through analyzing the financial policy tools affecting the attraction of foreign direct investment and a standard analysis, building a model that is compatible with the variables of the study The results of the descriptive analysis showed that the investment spending policy is an expansionary policy in cases of high oil revenues, and a contractionary policy when oil revenues decline. Because of the strength of fiscal policy tools (investment spending and the general budget balance) to attract scarce foreign direct investment due to their significant impact, and the weakness of tax policy due to its insignificant impact on foreign direct investment, it is clear that the tax policy must be activated. By creating a tax system that helps attract foreign direct investment, rationalizing investment spending to create a suitable climate for attracting investment, working on political and economic stability, and activating laws that help attract foreign direct investment.
Keywords: Fiscal Policy, Foreign Direct Investment, Investment Spending, Taxes, Public Budget Balance.