Sustainable development indicators implications on Saudi Sustainable Economic Growth

Abstract

Sustainable Development Indicators (SDIs) are crucial for economic growth (EG) by offering a broader perspective on development, moving beyond a sole focus on gross domestic product (GDP). SDIs encompass indicators related to social equity, EG, and environmental preservation, providing a more comprehensive assessment of sustainable development. This study examines the contributions of SDIs to GDP growth in the KSA economy from 1995 to 2021. Specifically, the study evaluates the impact of life expectancy at birth (LIFEEXP), mean years of schooling (MEANYRSCH), expected years of schooling (EXPYRSCH), CO2 emissions (CO2), globalization index (GLOB), and digital connectivity (INT) on the KSA economy. The Autoregressive Distributed Lag (ARDL) model is employed to assess cointegration relationships and estimate both long-run and short-run coefficients for these variables. The ARDL cointegration test confirms the existence of long-term cointegration relationships between GDPP, LIFEEXP, MEANYRSCH, EXPYRSCH, CO₂, GLOB, and INT. LIFEEXP is found to have the highest positive coefficient, significantly linked with GDPP growth in both the long and short runs. EXPYRSCH is negatively linked to EG in the long run, while MEANYRSCH positively influences growth. CO₂ shows an insignificant positive connection with growth in the long run, but in the short run, an increase in CO₂ stimulates EG. The long-term effects of GLOB on KSA’s EG are negative. The coefficient for INT is negatively associated with GDPP growth in the long run, though it promotes growth in the short run. A negative error correction term coefficient suggests that short-term variations will adjust to long-term equilibrium at a rate of 1.54 % per year. The policy implications of this study recommend a multi-sectoral development strategy that prioritizes human capital, digital transformation, environmental sustainability, and managed globalization to ensure resilient and equitable EG in KSA.