Natural Resources Management as Drivers of Economic Growth: Fresh Insights from a Time Series Analysis of Saudi Arabia

Natural resources management has played an important role in uplifting the growth performance of countries over the years. However, for the Kingdom of Saudi Arabia (KSA), very little is known regarding the influence of natural resources on economic growth. Therefore, this study focused on investigating the relationship between natural resources and economic growth by focusing on the KSA. This study was based on data for the period 1973-2022 analyzed through "Autoregressive Distributed Lag (ARDL)" modeling. To identify the directions of the relationships between the selected variables, the present study carried out causality testing. The findings indicate that natural resources improved the growth of KSA, which was an indication of the "resource blessing" hypothesis. Other variables, such as education, employment, and investment, also contributed positively to the growth of the KSA economy. Surprisingly, openness to trade decelerated the growth performance. In the short run, again, we found a positive impact of natural resources, education, investment, and employment on growth. Finally, openness to trade maintained its negative impact on growth in the short run. The causality analysis displayed both one-way and two-way relationships between the selected variables. This study suggests that KSA authorities must focus on gearing up the process of economic diversification. Moreover, increased investment, both in physical and human capital, is needed to improve and sustain long-term growth.