The impact of economic diversification on Saudi Arabia's economic growth

Economic diversification is important for promoting sustainable development and improving living standards worldwide. This study focuses on analyzing how economic diversification affects economic growth in Saudi Arabia. The research considers various factors such as economic growth, capital stock, fuel exports, human capital, imports, the number of companies listed per million people, non-oil Gross Domestic Product (GDP), oil GDP, stock market capitalization, the annual growth of total exports, and export diversification over the period from 2000 to 2023. Three separate models are examined, with total GDP, oil GDP, and non-oil GDP as the dependent variables in each model, respectively. The results show that fuel exports, total exports, and capital formation positively and significantly affect all three GDP categories. In contrast, export diversification is negatively and significantly related to oil GDP but positively and significantly influences non-oil GDP. Additionally, improvements in human capital positively impact all GDP categories, with a significant effect on non-oil GDP. The study suggests that promoting export diversification and investing in human capital can enhance non-oil GDP growth while reducing dependence on oil exports is crucial for economic resilience and sustainability.