Implications of Social Isolation in Combating COVID-19 Outbreak in Kingdom of Saudi Arabia: Its Consequences on the Carbon Emissions Reduction

Mary Oluwatoyin Agboola, Festus Bekun and Daniel Balsalobre-Lorente
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Mary Oluwatoyin Agboola: Finance and Banking Department, College of Business, Dar Al Uloom University, Riyadh 13314, Saudi Arabia
Daniel Balsalobre-Lorente: Department of Political Economy and Public Finance, Economics and Business Statistics and Economic Policy, University of Castilla-La Mancha, 13001 Ciudad Real, Spain

Sustainability, 2021, vol. 13, issue 16, 1-16

Abstract: The aftermath of the COVID-19 pandemic has two striking impacts on the economy of the Kingdom of Saudi Arabia. First, the economic contraction of business and economic activities. Second, the effect of oil prices dropping as energy demand decreases in the international market. This study seeks to underpin the linkage between GDP growth, oil price, foreign direct investment (FDI), air transport, social globalization and carbon dioxide emission by applying time-series econometrics techniques of the following: fully modified ordinary least squares, dynamic ordinary least squares and canonical tests. The results of the Johansen cointegration test and empirical analysis trace a long-run equilibrium relationship between the highlighted variables. Our study shows that a 1% increase in FDI attraction increases economic growth by 0.004%; similarly, air transport and oil rent from KSA increased economic growth by 0.547% and 0.005%, respectively. These outcomes are indicative of the GDP growth ambition of the KSA economy in order to intensify FDI attraction and the air transportation sector. However, we also observe that increases in CO2 emission increase GDP growth. Thus, this suggests that the economic growth in KSA is not green, indicating the need for green economic growth pursuit targets.

Keywords: sustainable development; clean growth; oil price fluctuation; FDI; COVID-19 (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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