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Impact of oil exports and non-oil exports on economic growth in Saudi Arabia: an econometric study using ARDL approach

Journal: SocioEconomic Challenges (SEC) (Vol.7, No. 4)

Publication Date:

Authors : ; ; ;

Page : 106-115

Keywords : Autoregressive Distributed Lag Model; Domestic product; Economic Diversification; Long run; Short run;

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Abstract

This study's primary goal is to examine Saudi Arabia's performance from 2000 to 2022. In order to accomplish this, the Autoregressive Distributed Lag (ARDL) model was employed along with a limits test. The study's findings indicate that oil exports impact short-term and long-term outcomes during the specified study period. On the other hand, non-oil exports initially contribute positively to the country's domestic product in the short term, but this contribution diminishes quickly and becomes negative and statistically insignificant in the long term. As a result, Saudi Arabia is dependent on the export of a single commodity, making it vulnerable to the effects of market volatility on the price of oil. To escape the excessive dependence of Saudi Arabia on oil and encourage non-oil export activities in order to stimulate long-term economic growth, the research recommends expanding into other productive sectors, such as agriculture and industry. These two sectors are vital for economic diversification, to obtain improved growth, and to limit the ramifications of the negative effects caused by international changes in oil prices. It is essential to take this strategy to prevent excessive reliance on this one-of-a-kind resource, this diversification is crucial for promoting exports beyond hydrocarbons and reducing reliance on oil. improve its level of investment in its thriving domestic sectors and take steps to lower the country's high production costs by constructing infrastructure that would enable the growth of non-oil exports, especially because Saudi Arabia will become a member of the BRICS group of countries beginning in January 2024.

Last modified: 2024-01-24 22:59:15