Towards the Realisation of Vision 2030 and Beyond in Saudi Arabia: A Causality Analysis between Education and Economic Growth
Towards the Realisation of Vision 2030 and Beyond in Saudi Arabia: A Causality Analysis between Education and Economic Growth

Summary/Abstract: Education is sine qua non to economic growth and development of any nation. This paper investigates the short- and long-run relationship between economic growth, government spending on education and tertiary student enrolment in the Kingdom of Saudi Arabia. Examining this relationship is crucial towards the realisation of Saudi Arabia’s economic development Vision 2030. This study used cointegration and error correction model to examine the short- and long-run relation between the period 1981 and 2016 in Saudi Arabia. The results revealed that education and economic growth in Saudi Arabia have long run relationship. There is bidirectional causality between GDP and tertiary student enrolment in the long-run, unidirectional causality from government spending on education to both GDP and tertiary student enrolment. In the short run, unidirectional causality was found from tertiary student enrolment to GDP, and also from government spending on education to tertiary student enrolment. This implies that government should intensify her efforts to increase tertiary student enrolment and spending on education as these would play great role towards the realisation of Saudi Arabia’s vision 2030. Encouraging more youths (both males and females) to go for higher education in tertiary institutions by offering different supports which include increasing government spending on education would improve the Citizens’ human capital and skills required to meet the industrial needs. It is believed that this would bring about a sustainable economic development in Saudi Arabia and facilitate the realisation of Vision 2030.

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