Received:
2020-02-10 | Accepted:
2020-05-25 | Published:
2020-06-30
Title
Concentration of oil sector or diversification in Saudi economy: consequences on growth sustainability
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.
Keywords
oil sector, concentration and diversification, economic growth, government revenues, investment, exports
JEL classifications
O13
, O11
, L25
, F14
URI
http://jssidoi.org/jesi/article/591
DOI
Pages
3369-3384
Funding
The authors extend their appreciation to the Deputyship for Research & Innovation, Ministry of Education in Saudi Arabia for funding this research work through the project number (DRI-KSU-SS-341).
This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License
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