Econometric Insights into Sectoral Dynamics and Economic Factors in Saudi Arabia: Assessing Impacts and Resource Utilization

Abstract

Examining the interdependencies between different critical variables, this research probes the complex dynamics of the Saudi Arabian economy. The research provides ideas on the impact of various economic factors on Saudi Arabia's economy based on an exhaustive literature analysis. These factors include manufacturing value added, unemployment rates, agricultural water withdrawals, and economic diversification. Using data collected between 2003 and 2022, the multiple regression model incorporates the following factors: spending on education, value added manufacturing, freshwater withdrawals, employment in the service sector, GDP growth, labor force participation, oil rents, value added services, and unemployment rates. Outside shocks are captured via dummy variables for the 2008 recession and the 2020 COVID-19 pandemic. Findings highlight the importance of manufacturing as a driver of economic development, since value added in manufacturing has a significant effect on GDP growth. The research shows that unemployment rates are susceptible to outside shocks, such the COVID-19 epidemic, which had a significant impact. In addition, it stresses the significance of sustainable practices by demonstrating the complex connection between freshwater withdrawals for agriculture and overall freshwater management. The study sheds light on the complex Saudi economic landscape, even though several variables were found to be statistically unimportant following further analysis. Contributing to a better knowledge of the Saudi Arabian economy, these findings have implications for evidence-based policymaking and strategic decision-making. Further investigation and study are needed to further understand the complex economic links that have been found, since this study does fill certain gaps in the literature.