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Does the Vision 2030 and Value Added Tax Leads to Sustainable Economic Growth: The Case of Saudi Arabia?

Suleman Sarwar (), Dalia Streimikiene (), Rida Waheed (), Ashwag Dignah () and Asta Mikalauskiene ()
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Suleman Sarwar: Finance and Economics Department, College of Business, University of Jeddah, Jeddah 21959, Saudi Arabia
Dalia Streimikiene: Kaunas Faculty, Vilnius University, Muitines 8, 44280 Kaunas, Lithuania
Rida Waheed: Finance and Economics Department, College of Business, University of Jeddah, Jeddah 21959, Saudi Arabia
Ashwag Dignah: Finance and Economics Department, College of Business, University of Jeddah, Jeddah 21959, Saudi Arabia
Asta Mikalauskiene: Kaunas Faculty, Vilnius University, Muitines 8, 44280 Kaunas, Lithuania

Sustainability, 2021, vol. 13, issue 19, 1-20

Abstract: The motivation behind the current research is to check the effect of the recent introduction of value added tax (VAT) and Vision 2030 on the economy of Saudi Arabia. To check this, those variables are added to the analysis which contribute to economic development including labor, capital, oil price, financial development, and trade openness to examine that how economic transformation affects the role of these variables in economic growth. According to the vector error correction (VEC) model, the impact of labor becomes negative after VAT, however, the impact of capital and financial development becomes significant by this transformation. The coefficients of oil prices, for positive and negative shocks, are significant and negative. Financial development and trade openness are reporting surprising results; positive shocks have shown negative coefficients. However, after Vision 2030, trade openness has a significant and positive coefficient. Policy implications include diversification of exports, reviving the private financing mechanism and restructuring the export/import policies.

Keywords: Saudi Arabia; Vision 2030; value-added tax; sustainable economic growth; vector error correction (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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