Economic Growth and Government Spending in Saudi Arabia: An Empirical Investigation

Abstract

This paper empirically examines the effects of different types of government expenditures, on economic growth in Saudi Arabia. We use different econometric techniques to estimate the short- and long-run effects of these expenditures on growth and employ annual data over the period 1969-2010. Our findings indicate that while private domestic and public investments, as well as healthcare expenditure, stimulate growth in the long-run, openness to trade and spending in the housing sector can also boost short-run production. These findings draw some policy implications for Saudi policymakers on maximizing the returns of the government spending on economic growth.

Keywords: Economic growth, Saudi Arabia, Government expenditures, Fiscal policy, Time series, Economic models, Government Spending, Oil Exporting Economy, total expenditures, capital expenditures, defense expenditures, health expenditures, education expenditures, public expenditures, expenditure growth, expenditure categories, consumption expenditure, composition of government spending, medium-term expenditure, medium-term expenditure framework, fiscal affairs, taxation, capital expenditure growth, public spending, government consumption expenditure, fiscal affairs department

JEL Classification: E62, H50, O13, Q48