Measuring the Macroeconomic Variables Affecting the GDP of the Kingdom of Saudi Arabia - during (1980-2021)

Abstract

This study aims to measure the main macroeconomic variables that affect the Gross Domestic Product (GDP) in the Kingdom of Saudi Arabia, as well as the relationship between them in the long term. The descriptive analytical approach was used to analyze the data through the Autoregressive Distributed Lag (ARDL) approach for the period (1980-2021). The results of this study showed that all the variables in the GDP are significant, meaning that they have an impact on the dependent variable in the long run, except for the inflation, which showed that it had no significant effect on the Saudi GDP. The study also found that there is a positive relationship between the GDP and government spending, gross capital formation, labor force and exports, so increasing these variables by one-unit lead to an increase in the long-run GDP by 1.538, 3.389, 0.041, 0.855 unit, respectively. On the other hand, this study showed that the relationship between the GDP and imports is negative, meaning that an increase in the imports by one-unit leads to a decrease in long-run GDP by 3.063 units. As a result, the study recommended reducing dependence on oil, as it is the main supporter of many macroeconomic variables, through diversifying sources of economic income.