Concentration of oil sector or diversification in Saudi economy: consequences on growth sustainability

Khalid Abdullah Alkhathlan (), Tarek Tawfik Yousef Alkhateeb (), Tarek Tawfik Yousef Alkhateeb (), Haider Mahmood () and Wardah Abdulrahman Bindabel ()
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Khalid Abdullah Alkhathlan: King Saud University, Saudi Arabia
Tarek Tawfik Yousef Alkhateeb: Prince Sattam Bin Abdulaziz University, Saudi Arabia
Tarek Tawfik Yousef Alkhateeb: Kafrelsheikh University, Egypt
Wardah Abdulrahman Bindabel: Prince Sattam Bin Abdulaziz University, Saudi Arabia

Entrepreneurship and Sustainability Issues, 2020, vol. 7, issue 4, 3369-3384

Abstract: Oil sector contributes most of macroeconomic performance in Saudi Arabia. Using a period 1970-2018, we calculate the production, exports, government revenues, investment and employment concentration indices using normalized Herfindahl Hirschman index and test the effects of concentration indices on the economic growth. We find that exports and government revenues are highly concentrated and majorly depend on the oil sector. Employment is more concentrated by public sector and production is majorly concentrated on oil sector. Investment is shown relatively lesser dependence on the oil sector with compare to exports, production and government revenues. In the long run, we find the positive effects of production and government revenue concentrations on the economic growth and negative effects of exports and employment concentrations. Moreover, we find the Granger causality from production concentration to the economic growth, from government revenue and exports concentrations to the production concentration, from investment concentration to the export concentration and from production, investment and government revenue concentrations to the employment concentration.

Keywords: oil sector; concentration and diversification; economic growth; government revenues; investment; exports (search for similar items in EconPapers)
JEL-codes: F14 L25 O11 O13 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:7:y:2020:i:4:p:3369-3384

DOI: 10.9770/jesi.2020.7.4(52)

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