Religious Tourism and Economic Growth in Oil-Rich Countries: Evidence from Saudi Arabia

Abstract

Key studies have identified the need to diversify the Kingdom of Saudi Arabia economy beyond its heavily oil-based status if it is to attain long-term sustainable growth. Tourism, in particular religious tourism, has been recognized as one key non-tradable sector that could promote this growth. This article applies a time-series approach to examine the impact of the tourism industry on the economic prosperity of the Kingdom between 1970 and 2011. The results show that tourism only plays a minor role in improving economic growth when the economy as a whole is taken into consideration. However, when isolating the non-oil sectors, the impact of tourism could be seen to have a greater influence on economic growth. Tourism is therefore potentially important for any future diversification of the economy from oil.