The Symmetric Relationship Between Natural Gas Consumption and sustainable Economic Growth in Saudi Arabia

Author:

Alzyadat Jumah Ahmad.1

Affiliation:

1. Dar Aluloom University

Abstract

Abstract

This paper attempts to investigate the symmetric relationship between natural gas consumption and economic growth in Saudi Arabia over the period 1990–2021 by extending the production function including capital, labor, external trade, and financial development. The study applied the autoregressive distributed lag (ARDL) technique. The result of Granger causality test indicates a causal relationship from NGC to RGDP, i.e. the results supported the growth hypothesis in KSA which is known in the literature as energy consumption-led growth hypothesis. The short- and long-run results also supported the growth hypothesis that NGC contributes to economic growth. The result also showed that the accumulation of capital, labor force, and economic openness contribute to stimulating economic growth in the KSA in the long run, while the results showed the negative impact of bank credit on economic growth in the long run. The study suggests that it is possible in the near future that KSA will be able to meet its energy needs by adopting renewable energy alternatives. However, energy policies should be implemented sufficiently to promote sustainable economic growth In line with achieving the Kingdom’s Vision 2030.

Publisher

Springer Science and Business Media LLC

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