Economics

Do personal remittance outflows impede economic growth in Saudi Arabia? The role of trade, labor force, human, and physical capital

M. S. Islam and I. A. Alhamad

This study by Md. Saiful Islam and Ibrahim A. Alhamad explores how remittance outflows affect Saudi Arabia's economic growth. While short-term effects are mixed and somewhat negative, the research indicates that reducing these outflows might bolster long-term growth. Discover the intricate relationship between trade, labor, and capital in shaping economic outcomes!

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Abstract

This study investigates the impact of remittance outflow on the economic growth (EG) of Saudi Arabia from 1985 to 2019, controlling for trade, labor force, human capital, and physical capital. Using the non-linear autoregressive distributive lag (NARDL) model, cointegrating regressions, and vector error correction (VEC) Granger causality check, the study finds that remittance outflow has mixed but negative short-run impacts on EG, while long-run EG is augmented if remittance outflows decline. Trade and labor force positively contribute to EG, while human and physical capital do not significantly influence it. Policymakers should attract expatriates' savings to domestic consumption and investment through labor laws, policies, and incentives, and upgrade education quality to develop the Saudi labor force.

Publisher

Humanities and Social Sciences Communications

Published On

Mar 18, 2023

Authors

Md. Saiful Islam, Ibrahim A. Alhamad

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