| المستخلص: |
This paper evaluates the development plans that the government of Saudi Arabia implemented to achieve the goal of diversifying income and increasing the non oil exports by applying the cointegration methodology and short and long run causality techniques to Saudi Arabia’s data for the last three decades. These development plans targeted the infrastructure to increase the share of non oil sector (government sector (GS), private sector (PS)) to the GDP The Johansen’s test of cointegration is performed . The diagnostic tests for adequacy of the model also performed and passed. The empirical analysis found critical evidence that changes in the size of government have an impact on changes in the growth of GDP in Saudi Arabia. However, as Barro (1990) suggested, since the impact of government may vary depending on the component of the government spending, in the next step of the analysis the government spending will be part of the non oil sector besides the private sector. The analysis also found strong evidence that changes in the private sector and the oil sector can lead to more economic growth. This study finds that there is a logical causality between the oil and non oil sectors with the GDP in Saudi Arabia. It is also found that an increase in the government expenditure would affect the share of the other variables in the economic growth in Saudi Arabia as well, however; the share of the private sector to the economic growth is still less than expected. This means that the government of Saudi Arabia has to change its strategies to make the private sector and thus non oil sector more effective in the economy. The results are consistent with some of the past studies that detect a feedback effects between GDP and the variables in the study.
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