The relationship between the GDP, FDI, and non-oil exports in the Saudi economy - 1970-2019: Evidence from (VECM) and (ARDL) assessment - according to Vision 2030

Abstract. This study examines the long-term and short-term balance relationship of GDP, Foreign Direct Investment to the performance of nonoil exports in KSA within the framework of the export-led growth (ELG) hypothesis: Evidence from ARDL, VECM and a smaller evaluation according to Vision 2030. We performed an analysis for the period from 1970 to 2019 by an autoregressive distributed lag (ARDL) model and checked the robustness of the results in the vector error correction (VECM) model. The co-integration and Toda - Yamamoto causality analysis are conducted by using two techniques of vector error correction model (VECM) and autoregressive distributed lag (ARDL). The main findings are: Foreign direct investment can increase GDP growth rates by increasing non-oil exports in the Saudi economy according to the results of the Toda - Yamamoto Causality Test; and the GDP in the Saudi economy are affected by FDI and the rates of non-oil exports, in the long and short term, and the reason is the strength of the reserves of the Saudi economy. The contribution of this research is that the outcomes found by means of econometric models can be used for predicting and measuring GDP in upcoming years, can get a guideline from this research To the economic policy makers in Saudi Arabia. Also, the dynamic interaction among FDI, non-oil exports, and economic growth is investigated using the ARDL. The ARDL co-integration results showed that GDP, FDI and non-oil exports are co-integrated, indicating the presence of a long-run equilibrium relationship between them. Besides, the results for the relationship between GDP, FDI and Non-Oil Exports are interesting and indicate that there is no significant from variables and vice-versa using Toda-Yamamoto causality.Keywords. GDP, FDI, Non-oil exports, Stationary, Toda-Yamamoto Test, VECM, ARDL.JEL. D42, D43, H21, L12, L13