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Concentration of oil sector or diversification in Saudi economy: consequences on growth sustainability

Author

Listed:
  • Khalid Abdullah Alkhathlan

    (King Saud University, Saudi Arabia)

  • Tarek Tawfik Yousef Alkhateeb

    (Prince Sattam Bin Abdulaziz University, Saudi Arabia)

  • Tarek Tawfik Yousef Alkhateeb

    (Kafrelsheikh University, Egypt)

  • Haider Mahmood

    (Prince Sattam Bin Abdulaziz University, Saudi Arabia)

  • Wardah Abdulrahman Bindabel

    (Prince Sattam Bin Abdulaziz University, Saudi Arabia)

Abstract

Oil sector contributes most of macroeconomic performance in Saudi Arabia. Using a period 1970-2018, we calculate the production, exports, government revenues, investment and employment concentration indices using normalized Herfindahl Hirschman index and test the effects of concentration indices on the economic growth. We find that exports and government revenues are highly concentrated and majorly depend on the oil sector. Employment is more concentrated by public sector and production is majorly concentrated on oil sector. Investment is shown relatively lesser dependence on the oil sector with compare to exports, production and government revenues. In the long run, we find the positive effects of production and government revenue concentrations on the economic growth and negative effects of exports and employment concentrations. Moreover, we find the Granger causality from production concentration to the economic growth, from government revenue and exports concentrations to the production concentration, from investment concentration to the export concentration and from production, investment and government revenue concentrations to the employment concentration.

Suggested Citation

  • Khalid Abdullah Alkhathlan & Tarek Tawfik Yousef Alkhateeb & Tarek Tawfik Yousef Alkhateeb & Haider Mahmood & Wardah Abdulrahman Bindabel, 2020. "Concentration of oil sector or diversification in Saudi economy: consequences on growth sustainability," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(4), pages 3369-3384, June.
    • Handle: RePEc:ssi:jouesi:v:7:y:2020:i:4:p:3369-3384
    DOI: 10.9770/jesi.2020.7.4(52)
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    References listed on IDEAS

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    1. Roberto Basile & Aleksandra Parteka & Rosanna Pittiglio, 2018. "Export diversification and economic development: A dynamic spatial data analysis," Review of International Economics, Wiley Blackwell, vol. 26(3), pages 634-650, August.
    2. Yuzhuo Cai & Roger Normann & Rómulo Pinheiro & Markku Sotarauta, 2018. "Economic specialization and diversification at the country and regional level: introducing a conceptual framework to study innovation policy logics," European Planning Studies, Taylor & Francis Journals, vol. 26(12), pages 2407-2426, December.
    3. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    4. Albassam, Bassam A., 2015. "Economic diversification in Saudi Arabia: Myth or reality?," Resources Policy, Elsevier, vol. 44(C), pages 112-117.
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    Cited by:

    1. Mahmood, Haider & Chaudhary, A. R., 2013. "Impact of FDI on Income Inequality in Pakistan," MPRA Paper 109460, University Library of Munich, Germany.
    2. Al-Qahtani, Maleeha Mohammed Zaaf & Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Abdalla, Manal Abdalla Zahed & Mawad, Ghada Shihata Ebrahim & Alkhatib, Maha Ahmed Hussein, 2020. "Exploring the Level of Managerial, Political, Academic, Economic and Social Women Empowerment in Saudi Arabia," MPRA Paper 109447, University Library of Munich, Germany.
    3. Yana S. Matkovskaya & Elena Vechkinzova & Yelena Petrenko & Larissa Steblyakova, 2021. "Problems of Innovative Development of Oil Companies: Actual State, Forecast and Directions for Overcoming the Prolonged Innovation Pause," Energies, MDPI, vol. 14(4), pages 1-24, February.

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    More about this item

    Keywords

    oil sector; concentration and diversification; economic growth; government revenues; investment; exports;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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