Economic Growth and Tourism Trends and Dynamics in Saudi Arabia: A Time Series Perspective

Abstract

This study employs time-series econometric analysis to explore the trends and dynamics between economic growth and tourism development in Saudi Arabia. The investigation sheds light on the evolving trends and dynamics within this nexus. The findings hold implications for policymakers and researchers seeking to comprehend the interplay between these crucial variables. Through a series of comprehensive analyses, the study reveals significant associations between economic growth and tourism development in Saudi Arabia. The complexities arising from varying cointegration indications prompted an insightful investigation into the subsequent regression analyses. The findings revealed that the incorporation of the first differenced variables led to diminished statistical significance. This observation underlines the need to cautiously interpret initial results, attributing them to spurious results due to cointegration. Thus, the study accentuates the importance of accounting for cointegration effects, with greater emphasis placed on regression outcomes involving first differenced variables. Nonetheless, prudent interpretation of these findings is imperative, taking into account the study's limitations and the intricate spectrum of factors influencing the convoluted relationship between tourism and the economy in the country. Noteworthy among these limitations are data constraints and the dearth of literature that delves into Saudi Arabia's distinct context. Moreover, the study acknowledges the intricate landscape shaped by the nation's historical dependence on oil revenue and the ongoing transformation of its burgeoning tourism sector. Despite these constraints, the research yields invaluable insights that enrich the broader comprehension of the role of tourism in fueling economic growth, particularly in a resource-dependent country like Saudi Arabia. In conclusion, this study emphasises the imperative for Saudi Arabia to harness the potential of tourism diversification in its economic landscape. This strategic shift requires proactive promotion, investment, and the cultivation of sustainable growth across various sectors. By embracing a holistic approach to growth, Saudi Arabia can foster economic resilience, inclusivity, and competitiveness on a global scale. The recommendations put forth underscore the need for comprehensive data collection, collaborative research efforts, and a focus on enhancing the nation's tourism infrastructure to attract a diverse range of tourists. By implementing these suggestions, Saudi Arabia can unlock the transformative potential of tourism as a driving force for economic development and economic diversification.