A Study of Innovative Transportation and its Effects on Economic Growth of a Nation - A Case Study of Saudi Arabia

The development of transport takes place in socio-economic context. Development does not take place without proper infrastructure. The transport sector is very important in the economy. It is used for development due to intensive use of infrastructure. Innovation in transport makes sure that transport is safer and well-coordinated. Especially, in global economy transportation gains importance due to increasing economic opportunities and mobility of people. Therefore, transport infrastructure and level of economic development are apparently related. An efficient transport system reduces costs in many sectors. The effects of transport are not always predicted and can have unforeseen consequences such as congestion. Transport system holds an important responsibility both economically and socially. This study aims to investigate and analyze the causality relations between innovative road transport infrastructure and economic growth in Saudi Arabia. The study is mainly based on information from secondary data sources obtained from Saudi Arabia Monetary Agency and World Bank over the period of 1989 to 2018 and information from third-party respondents involved in the transport sector are included. Granger causality test is used in this study to find out the relationship between different variables with Akaike Lag Length Selection Information Criteria and Vector Autoregression (VAR) model is used to find the causality relation. The result shows single directional causality from real GDP to transport infrastructure. There is, however, no proof to support that road transportation infrastructure is the major cause of economic growth. The finding lies in the basic idea that economic growth is the basis to provide the required support for the development of transportation infrastructure.