MEASURING AND ANALYZING THE IMPACT OF THE TRADE SECTOR ON INDUSTRIAL GROWTH: SAUDI ARABIA AS A MODEL (1970–2025)

Abstract

This study aims to analyze the impact of foreign trade—represented by exports and imports—and oil revenues on industrial growth in the Kingdom of Saudi Arabia during the period (1970–2025), utilizing annual data extracted from the World Development Indicators (WDI) database. To achieve the objectives of the study, a comprehensive econometric methodology was employed, including the Autoregressive Distributed Lag (ARDL) model to examine short- and long-run relationships, the Quantile Regression model to reveal variations in effects across different levels of industrial growth, as well as the Fully Modified Ordinary Least Squares (FMOLS) model to verify the robustness of the results. The empirical findings revealed a long-run equilibrium relationship among the study variables, with exports and oil revenues exhibiting a statistically significant positive effect on industrial growth, whereas imports exerted a statistically significant negative effect. Furthermore, the quantile regression results demonstrated heterogeneity in the impact of the variables across different quantiles, while the FMOLS results confirmed the stability of the long-run relationships and their consistency with the ARDL model estimates. Ultimately, the study highlights the significance of promoting industrial exports, directing oil revenues toward productive investments, and strengthening the industrial base to achieve more sustainable growth within the framework of the Saudi Vision 2030 targets.