New insights into the dynamic impact of sectoral growth on sustainable economic development in Saudi Arabia: Evidence from the autoregressive distributed lag model

Abstract

Sustainable development (SUD) is an integral part of Vision 2030 introduced by the Kingdom of Saudi Arabia (KSA). However, the contributions of the industrial, agricultural, and service sectors to SUD remain largely unexplored. Accordingly, this research study attempted to explore the contributions of the industrial, agricultural, and service sectors to SUD by focusing on KSA. The paper utilized annual data for the period 1990–2024 and applied autoregressive distributed lag (ARDL) methods to extract results from the specified models. The study’s results showed that the industrial, service, and agricultural sectors have improved SUD in the long run. Furthermore, we found that the impact of the industrial sector on SUD is the greatest compared to those of the service and agricultural sectors in the long run. In the short run, the results demonstrated that the impact of the service sector on SUD is more dominant than those of the industrial and agricultural sectors. Moreover, our results underscored that human capital has improved SUD both in the long run and in the short run. Furthermore, the results demonstrated that the inflation rate and the natural resource sector have improved SUD in the short run and deteriorated it in the long run. Moreover, trade openness has improved SUD in the long run and deteriorated it in the short run. Our findings indicate that the strategic alignment of sectoral growth with SUD is crucial for progress toward achieving the SDGs, as well as for achieving the important goals of KSA’s Vision 2030.