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How Do the Remittance Outflows React to Economic Development in Saudi Arabia? Evidence from NARDL

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  • Farea Mohammed Alharbi

    (Economics Finance Departement, College of Business Administration, Taif University, P.O. Box 11099, Taif 21944, Saudi Arabia)

Abstract

This research aims to examine the effects of remittance outflows on Saudi’s non-oil economic growth (NOGDP). While few studies have examined the effects of remittance outflows on remitting countries’ economic development, none have looked into the asymmetric impact on Saudi Arabia’s non-oil economic growth. This research fills the gaps by looking at the uneven effects of remittance outflows on Saudi NOGDP from 1990 to 2020. The empirical estimation is based on the NARDL (Nonlinear Autoregressive Distributed Lags) method. The results show that remittance outflows have a considerable positive effect on Saudi NOGDP, indicating its economic benefit. We found that the government’s current and capital expenditures have statistically significant positive impacts on NOGDP in the long and short runs. Consequently, several policy insights could be considered to maximize the effectiveness of government fiscal policy in supporting non-oil sector development. The positive effect of remittance outflows on Saudi economic growth could be the vital role of the imported high-skilled and productive labour force in developing the non-oil private sector. The positive influence of remittances on Saudi economic growth is essential for policymakers who have to undertake a unique Saudi policy to diversify the labour market and encourage local consumption and investment spending by international workers.

Suggested Citation

  • Farea Mohammed Alharbi, 2022. "How Do the Remittance Outflows React to Economic Development in Saudi Arabia? Evidence from NARDL," Economies, MDPI, vol. 10(5), pages 1-12, April.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:5:p:105-:d:805890
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