Long Term Economic Growth in Oil-Rich Saudi Arabia: What is the role for non-oil sectors?

A Alodadi and James Benhin

Economic Issues Journal Articles, 2015, vol. 20, issue 1, 109-130

Abstract: As a depletable resource, oil is a useful source of economic growth, but may not be relied upon for long-term sustainable development. Diversification from oil is needed to achieve this. This paper examines the most important non-oil determinants of growth in the Saudi economy between 1970 and 2011, using the Johansen approach and error correction modelling, to study the relationship between all variables, both long and short-run. It focuses on the role of non-oil sectors, given the government's determination to reduce dependence on oil income. The study uses exports, government spending, private and public investment, religious tourism, labour and capital as independent variables, while economic growth is addressed as the dependent variable. Empirical results show that all variables are important in the growth of the Saudi economy except non-oil exports, which do not have a significant effect on economic growth. Religious tourism's role was not found to be significant in the process of economic growth, when the economy as a whole was taken into consideration. Nonetheless, when isolating the non-oil sectors, the effect of religious tourism had a greater influence on economic growth. Concrete evidence also exists as to the importance of the role of an additional variable - government spending - in enhancing economic growth.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.economicissues.org.uk/Files/2015/115Alodadi.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eis:articl:115alodadi

Access Statistics for this article

More articles in Economic Issues Journal Articles from Economic Issues Contact information at EDIRC.
Bibliographic data for series maintained by Dan Wheatley ().