Mechanical functioning of the Saudi economy in the context of the national transformation plan and its impacts on macroeconomic variables in Saudi Arabia
by Abdessalem Gouider; Sahbi Gabsi
International Journal of Economics and Business Research (IJEBR), Vol. 16, No. 3, 2018

Abstract: The aim of this paper is to investigate the mechanical functioning of the Saudi economy in the context of the national transformation plan (NTP) and its impacts on most of the macroeconomic variables in Saudi Arabia. In line with the NTP, which is based mainly on promoting economic freedom, we apply the fully modified ordinary least square (FMOLS) approach to measure the impact of the economic freedom on non-oil GDP (proxy of economic growth) through the transmission channels including foreign direct investment (FDI), openness, government spending and unemployment from 1996 to 2015. The empirical results show that there is a significant positive relationship between economic growth and economic freedom in Saudi Arabia. However, the transmission channels' effects of the economic freedom index on the non-oil GDP in Saudi Arabia are slightly low. We suggest that policy-makers should implement more incentive measures to improve the Saudi economy rank within the economic freedom index.

Online publication date: Fri, 31-Aug-2018

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