The Relative Importance of Factors Influencing Saudi Arabia's Productivity

Abstract

A country's productivity reflects its current economic standing and where it could potentially grow in the future. This paper explains the relative significance of factors affecting the productivity of Kingdom of Saudi Arabia (KSA). The issue of productivity has been raised in the growing diversion of the economic literature to the development side, leaving little research on countries productivity as measured in gross domestic product (GDP), that provides empirical basses for the developmental debates. Eight important factors are researched for their relative explanation of the KSA’s productivity, which include the spendings on i) education, 2) subsidies, 3) research & development, 4) physical capital, 5) health, 6) gender equality, 7) inflation, and 8) openness to trade. These factors are assessed using the Ordinary Least Squares (OLS) and combine autoregressive features with those of moving averages (ARIMA). The study has theoretical implications for raising fresh evidence for the relative importance of these factors of production for developing countries such as KSA. The relative significance of these factors also informs predictions and policy making for the efficient resource allocation of keeping in view the targeted productivity level while chasing developmental objectives, such as those envisioned for 2030 in KSA.

Received: 31 January 2024 / Accepted: 16 April 2024 / Published: 5 May 2024