Saudi’s Export Demand Function: The ARDL Approach

Saudi Arabia has been witnessing a rapid growth in exports more specifically since the inception of 21st century. The paper intends to estimate Saudi’s export demand function using bound test approach to cointegration developed by Pesaran et al (2001). The result shows that there is long run equilibrium relationship between demand for export, world income and real effective exchange rate. The elasticity of demand for Saudi’s export with respect to world income and real effective exchange rate (REER) has been found to elastic, both, in the short run as well in the long run. The export has been found to more elastic in the short run than in the long run with respect to both the variables. Key Words: Export demand, price and income elasticity, bound test. JEL Classification: F1

A Causal Relationship between FDI Inflows and Export: The Case of India

Foreign Direct Investment (FDI) is considered as an important means of promoting export of the host countries. By training the local work force and upgrading the technical and managerial skills, it helps in raising the efficiency and productivity of the factors and hence competitive strength in the international market. In addition to this, by facilitating access to large international market, FDI makes a significant positive contribution to the host country’s exports. However this is true if FDI comes for efficiency reason and not for domestic market. The present study examines the nature of relationship between export and FDI in India over the period 1980-2010. Using Johansen co-integration method, the paper finds a stable long run equilibrium relationship between FDI and export growth. The result of Granger causality based on vector error correction model (VECM) shows that causality runs from export to FDI inflow direction and not from FDI inflow to export direction. In the short run, however, neither export Granger cause FDI inflow nor FDI inflow Granger cause export from India. Key words: Foreign Direct Investment, Export, cointegration, causality

Revealed Comparative Advantage of Saudi’s Exports

Saudi Arabia is an oil based economy, getting about 40% of its GDP and around 90% of its export earnings from oil and gases. This paper aims at identifying the products in which country has comparative advantage using Balassa’s method of revealed comparative advantage, and to examine their long run and short run relationship with export price and world income. The paper found that Saudi Arabia has comparative advantage in exporting mineral fuels, oil, distillation products; non-mineral products like organic chemicals; fertilizers; and plastic and articles threof. The study further finds that mineral fuels, oil, distillation products and plastic and articles threof have significant relationship with world income and export price. Organic chemicals is found to be significantly related to world income but not to export price. Key Words: Export, comparative advantage, bound tes

Determinants of India’s Agricultural Export

In the past decade, India has emerged as a major agricultural exporter, with exports climbing from just over $5 billion in 2003 to a record of more than$39 billion in 2013. India became the world’s seventh-largest exporter of agricultural products in 2013, surpassing Australia. In terms of net exports, India is now the world’s sixth-largest net exporter, with net exports doubles those of the EU-28. The study found that there exist a long run cointegration relationship between agricultural exports of India and Real effective exchange rate (REER), demand for agricultural products, agricultural production and India’s per capita income. All these variables Granger cause agricultural export in the short run as well as in the long run. Keywords: Agricultural Exports, REER, World import of agricultural goods, agricultural production, per capita income. JEL: F14, Q170

Oil Exports and Economic Growth: An Empirical Evidence from Saudi Arabia

Being oil-based economy, the economic prosperity of Saudi Arabia to a large extent depends upon international price of crude oil. Since substantial portion of government revenue and foreign exchange which determine the economic activities of the government and fulfill the import requirements of the country comes from oil exports, any disturbance in this sector is likely to affect entire economy of Saudi Arabia. The paper applied Johansen cointegration method and vector error correction model (VECM) to estimate long run relationship of economic growth with oil exports, imports and government consumption expenditure. The study has found that economic growth has long run relationship with oil exports, imports and consumption expenditure of the government. The study recommends monitoring and regulating imports and intensive efforts to diversify economic base in exports as well as import substituting industries of the country. Keywords: Oil Export, Economic Growth, Causality, Saudi Arabia JEL Classifications: C22, F14, H50, N1

A structural equation modeling approach to validate the dimensions of SERVPERF in insurance industry of Saudi Arabia

The Saudi Arabian insurance sector has two distinctive features. First, major revenue for this sector comes from the mandatory medical and motor insurance. Second, this sector is dominated by a few companies which generally provide the same products in the sector. Therefore, a company may focus on providing better service quality in order to attain future growth and stability. High-quality service is essential to gain a competitive advantage in the insurance sector. In this context, the present study identifies a gap in assessing the quality of service in the insurance sector of Saudi Arabia, using the SERVPERF scale in particular. Structural Equation Modeling is used to assess the quality of service. The results indicate that SERVPERF is not adequate to measure service quality in the context of Saudi Arabia. In the process, this study opens a debate on, whether a universally acknowledged SERVPERF scale is suitable to apply in an environment where service is of mandatory nature

Oil Price and Economic Growth: The Case of Indian Economy

Oil is an important input used in almost all the economic activities of any country. Hence, rise in its price is likely to adversely affect economic growth of oil importing countries like India. The present paper intends to examine the impact of oil price on economic growth of India. In order to examine the presence of cointegration relationship between economic growth, oil price, capital formation and inflation in the case of India, the study has used Pesaran's bound test method. The study finds that the variables under study exhibits long run cointegration relationship. VECM results suggest that oil price, capital formation and inflation Granger cause economic growth in the long run. Further, the result shows that the coefficient of oil price is negative and significant implying that oil price in India adversely affects country's economic growth. The study suggests that the government should refrain from imposing additional taxes in order to avoid rise in oil prices and its subsequent adverse effect on economic growth of the country. Keywords: Oil Price, Economic Growth, Bound Test, India. JEL Classifications: E20, E22, E31 DOI: https://doi.org/10.32479/ijeep.760

Energy Consumption and Economic Growth: The Evidence from India

The oil price shock of the 1970s and its disruptive impact on the economic activities all over the world dragged the attention of researchers to study the interaction between energy and real output. However, no conclusive evidence could be submitted about the direction of causality between the two. The present study has been an attempt to understand such relationship in the case of India. The paper has used the data from 1971 to 2014 and has found long run stable relationship between energy use and real output. The study also reveals that in the short run, there is unidirectional relationship between the two and energy Granger causes economic activities in India. In the long run, we find bidirectional relationship between energy and economic prosperity of India. Keywords: Oil Consumption, Economic Growth, India. JEL Classifications: E20, E22, E31. DOI: https://doi.org/10.32479/ijeep.803

Oil Price and Employment Nexus in Saudi Arabia

Higher oil price is a signal of economic growth in Saudi Arabia due to her heavy dependence on oil revenues. This study has perused the relationship between oil price and employment in Saudi Arabia by using sample period of 1980-2015 and by utilizing the linear and non-linear autoregressive distributed lag (ARDL) models. We have found a positive influence of oil price on employment level in both linear and non-linear ARDL settings. Further, employment effects of increasing and decreasing oil price are found asymmetrical in the non-linear ARDL and we have also found that increasing oil price is positively affecting employment more than declining employment due to fall in oil price. Further, economic growth supports employment significantly. This study recommends the government of Saudi Arabia to save oil revenues in time of prosperity to support employment level in the oil price crisis period. Keywords: Oil Price, Employment, Non-linear Autoregressive Distributed Lag JEL Classifications: Q41, E24, C1

Trade Openness and Employment Nexus in Saudi Arabia

Trade openness would increase the welfare of nation if it could also support the employment in the long run. This research explores the net effect of trade openness on the Saudi employment by using annual data of 1980-2015 and by using ARDL cointegration technique. Trade openness, government spending on education and economic growth have positive impacts on the employment in long run while mix evidence of these variables are found on employment in the short run with different lag effects. Based on results, we recommend the government to raise the trade openness by removing trade barriers and to increase spending on the education sector to support the higher employment level in the Kingdom