Scholars Bulletin (SB)
Volume-6 | Issue-06 | 139-145
Subject Category: Applied Statistic
Interactions between Non-oil exports and GDP, FDI in Saudi Arabia 1970-2019: A practical manual ARDL Approach and Toda - Yamamoto Causality
Hassan Tawakol A. Fadol
Published : June 30, 2020
Abstract
This paper aims to estimate the effect of Non-oil Exports on GDP, FDI in Saudi Arabian economy for the period between 1970 and 2019. Moreover, it investigates the causal relationship between Non-oil Exports, GDP and FDI applying the ARDL Bound test and Bootstrap Toda - Yamamoto (1995) causality test. The findings of this study suggest that Saudi Arabia followed an export-led growth path and that economic growth has a significant effect on the FDI growth process via export growth channels, in particular, non-oil exports. The overall findings of this study suggest that non-oil exports growth positively affects GDP in the Saudi economy, which in turn supports increased demand for FDI, when all things are considered equal. The results also show that an encouragement of non-oil exports is a necessity for an effective GDP, FDI in KSA. Therefore, in designing policies towards this direction, economy policy response lag need to be taken into. thus we suggest encouraging non-oil export activities in order to stimulate long-term economic growth in KSA this is by supporting increase demand for FDI. A favorable FDI would reduce the cost of production for producers in the non-oil sector. Thus, leading to a growth in the economy.