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Determinants of Economic Growth in the Kingdom of Saudi Arabia: An Application of Autoregressive Distributed Lag Model

Hatem Hatef Abdulkadhim Altaee, Mohamed Khaled Al-Jafari and Masoud Ali Khalid

Applied Economics and Finance, 2016, vol. 3, issue 1, 83-92

Abstract: This paper provides an empirical analysis of the relationship between economic growth and its determinants with special focus on gross fixed capital formation, export, import, and financial development for the Kingdom of Saudi Arabia (KSA). Therefore, the study utilized an annual data from 1980 till 2014, and employed both the autoregressive distributed lag model (ARDL) and the error correction method (ECM) to investigate the long-run and the short-run parameters between the variables. The findings suggest a positive relationship between fixed capital formation, export, in one hand and economic growth in the other hand, both in the short-run and the long-run. In contrast, the financial development variable found to have a negative effect on economic growth in the short-run, however, it turned out to be positive in the long-run. Finally, the import variable showed a negative contribution to growth in the long-run as well as in the short-run. The results are consistent with the theoretical and empirical predictions.

Keywords: Economic growth; export; import; financial development; gross fixed capital formation; autoregressive distributed lag; Kingdom of Saudi Arabia (search for similar items in EconPapers)
JEL-codes: R00 Z0 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:rfa:aefjnl:v:3:y:2016:i:1:p:83-92