Abstract
This paper uses the multivariate Johansen cointegration approach and Granger causality tests to study the causal relationship between the number of pilgrims and the non-oil GDP growth in Saudi Arabia over the period 1980–2016 by integrating the real effective exchange rate index as an additional variable. Our findings indicate that there is only one long-run relationship between the three variables when the non-oil GDP growth is the dependent variable. There is a unidirectional long-run causality from the number of pilgrims to non-oil GDP growth. Besides, we find no short-run causal relationships between the three variables. Therefore, an important policy implication resulting from this study is that pilgrims can be a led growth factor to economic growth in Saudi Arabia in the long run. The pilgrimage event can, therefore, be an excellent opportunity for Saudi Arabia to boost its economic activity as stated by its 2030 vision.
Highlights
The Hajj event takes place within the city of Makkah, which the Muslim world considers it has holy
We conclude that three variables NOEG, number of pilgrims (NP) and real effective exchange rate (RECR) are integrated of the same order one
The aim of this study is to examine the causal relationship between pilgrims and economic growth for Saudi Arabia using the Johansen multivariate cointegration technique
Summary
The Hajj event takes place within the city of Makkah, which the Muslim world considers it has holy. Millions of Muslims from various parts of the world participate in the holy event each year. This is especially because, among the Muslims community, the event is considered as a religious obligation. It is part of Islam’s five pillars, with Hajj being the fifth pillar (Fazel, 2016). As from early 2000, the Hajj annual event has been viewed as a destination for tourism, especially in Medina and Makkah. Various activities considered as rituals take place (Berkey, 2003)
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