The Relationship between Environmental Preservation Initiatives and National Economic Growth in Saudi Arabia

Abstract

This study investigates the relationship between economic growth and environmental quality represented by renewable energy development initiatives in Saudi Arabia and Sweden. While Saudi Arabia is among the world's top oil producers and consumers, Sweden is a leading force in the global transition into renewable energies. The employment of the Cobb-Douglas production function and generalised method of moments further helped us to identify input factors that determine the two countries' revenues, namely capital, labour, and energy consumption, thus enabling us to determine each factor's significance level. That said, this study found that the two variables influence each other, implying that their transition into renewable energies correlates with their GDP growth, and vice versa.