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The Linkage between Oil and Non-Oil GDP in Saudi Arabia

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  • Sami Alabdulwahab

    (Department of Economics, College of Business Administration, King Faisal University, Al-Ahas 31982, Saudi Arabia)

Abstract

Saudi Arabia is one of the world’s major producers of oil. The Saudi Government has launched its vision for the coming decade: Saudi Vision 2030 (also known as 2030 Vision). Saudi Vision 2030 aims to diversify economic income and be independent of oil revenue. The focus of Saudi Vision 2030 is increasing the role of the non-oil GDP in the economy. In this study, I tried to examine the link between oil and non-oil GDP in Saudi Arabia. I used autoregressive distributed lag (ARDL) cointegration, the most common tool used to examine linkages among variables. My ARDL results confirm the long-term cointegration between non-oil GDP and oil rent, thus implying that oil rent-seeking strategies still exist in Saudi Arabia. The short-term dynamics confirmed the impact of oil rent over the non-oil GDP. The ARDL results led to analyses of asymmetric effects. The NARDL model estimated and confirmed the symmetric effect of the oil rent on non-oil GDP. These results demonstrate the challenges in diversifying Saudi Arabia’s income.

Suggested Citation

  • Sami Alabdulwahab, 2021. "The Linkage between Oil and Non-Oil GDP in Saudi Arabia," Economies, MDPI, vol. 9(4), pages 1-21, December.
    • Handle: RePEc:gam:jecomi:v:9:y:2021:i:4:p:202-:d:706692
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    References listed on IDEAS

    as
    1. Zafar Ahmad Sultan & Mohammad Imdadul Haque, 2018. "Oil Exports and Economic Growth: An Empirical Evidence from Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 281-287.
    2. Mohammed Aljebrin, 2018. "Non-Oil Trade Openness and Financial Development Impacts on Economic Growth in Saudi Arabia," International Journal of Economics and Financial Issues, Econjournals, vol. 8(5), pages 251-260.
    3. Mathew Ekundayo Rotimi & Harold Ngalawa, 2017. "Oil Price Shocks and Economic Performance in Africa’s Oil Exporting Countries," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 13(5), pages 169-188, OCTOBER.
    4. Mounir Belloumi & Atef Alshehry, 2020. "The Impact of International Trade on Sustainable Development in Saudi Arabia," Sustainability, MDPI, vol. 12(13), pages 1-18, July.
    5. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
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    Cited by:

    1. Sugra Humbatova, 2023. "The Impact of Oil Prices on State Budget Income and Expenses: Case of Azerbaijan," International Journal of Energy Economics and Policy, Econjournals, vol. 13(1), pages 189-212, January.
    2. Amjad Taha & Gulcay Tuna, 2023. "Oil Price and Composite Risk Exposure within International Capital Asset Pricing Model: A Case of Saudi Arabia and Turkey," Energies, MDPI, vol. 16(7), pages 1-18, March.

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