The Long-Run Effect of E-commerce on Economic Growth in Saudi Arabia

Abstract

This study aims to examine the long-term impact of e-commerce on economic growth in Saudi Arabia using the Cointegration model. The study employs a theoretical and empirical approach by reviewing previous studies to identify some key variables which are the merchandise trade ratio, the number of mobile phone subscriptions, the percentage of internet users and mobile phone subscribers in the population, and the ratio of communication and computer service imports, using time series data from 1992 to 2022 collected from Saudi Central Bank and the World Bank's, and employing Cointegration model for analysis. Results of the study indicate a positive and statistically significant impact of the merchandise trade ratio and the number of mobile phone subscriptions on GDP in the long run. However, the study finds that a high statistical correlation between GDP and the percentage of internet users and mobile phone subscribers in the population does not positively impact economic growth. Additionally, the study found that the ratio of communication and computer service imports no longer affects GDP and economic growth in the long run. These findings first suggest that e-commerce can help diversify the national economy and increase economic growth rates. Second, highlight the need for technology and its use to be directed toward productive purposes. The government and regulators are encouraged to increase investment in e-commerce and facilitate the growth procedures for e-commerce companies.