The three-ways linkages between domestic investment, exports and economic growth: new evidence from Saudi Arabia

This research paper aims to investigate the relationships between domestic investment, exports, and economic growth in Saudi Arabia from 2000 to 2021. Using cointegration and vector error correction model analyses, six key findings have emerged. Firstly, neither domestic investment nor exports have a significant long-term impact on economic growth. Secondly, long-term domestic investment does not significantly influence exports, and vice versa. Regarding long-term dynamics, the research reveals that economic growth and domestic investment positively influence exports over an extended period. Additionally, domestic investment and exports serve as causal factors for shortterm economic growth. Furthermore, short-term relationships exist where economic growth and exports stimulate domestic investment, albeit with relatively weaker significance. Finally, the results highlight that economic growth and domestic investment jointly foster short-term export expansion. The research suggests the need to investigate additional economic, political, and structural factors beyond domestic investment and exports to better understand and enhance long-term economic growth in Saudi Arabia.