The impact of tourism in the kingdom of Saudi Arabia on GDP, (2005 – 2017: An analytical approach)

Abstract

Objectives: This study aims to highlight the spending of foreign and domestic tourism in KSA, and to investigate and analyze factors affecting Saudi's tourism sector, and its impact on the GDP.Methods/Statistical analysis: Three different regression models were specified and estimated in order to reflect the relationships between the dependent variable and independent variables in order the draw appropriate results and findings. The usage of regression method is straight forward to tackle such problem. The model of the study consists of the dependent variable which is the Gross Domestic Product (GDP) of Saudi Arabia of billions Saudi riyals and the independent variables which are: foreign spending of foreign tourists in millions Saudi riyals, local spending of domestic tourists in millions Saudi riyals, findings the results showed that the spending of foreign tourists – as expected – had positive impact on the GDP during the period of the study. Nevertheless, the domestic tourists had a negative impact on the GDP, which is unexpected due to the lower cost. For example, domestic tourists who travel to the destination using a car and have friends and family in the destination tend to spend less which brings a question about the effectiveness of comparing the average spending of the domestic and foreign tourists together Application. Entering tourists affect the GDP negatively while leaving tourists affect GDP positively. Finally, this study can help the policy makers in designing accurate plan which help in increasing the national income the development of KSA, beside enhancing the Saudi library by precise information about tourism.