Author(s): Abdelkrim A. Guendouz, Saidi M. Ouassaf
The purpose of this paper is to investigate the major macroeconomic factors affecting economic diversification in Saudi Arabia, and to investigate and analyze the strategies engaged in diversifying Saudi Arabia's economy as well as to adjudge the level of success that has been achieved away from the export of oil. The empirical study carried out to analyze the diversification of the Saudi Arabian economy, using multiple regression analysis for the period 1991-2016. The results suggest a direct correlation between the economic diversification index and The Gross Domestic Product (GDP), The Gross Fixed Capital Formation (GFCF), and the percentage contribution of Foreign Direct Investment to the GDP (FDI). The non-oil GDP to GDP (NOGDP/GDP), the percentage contribution of Non-Oil Government Revenues as a proportion of total government revenues (NOGOV), and the percentage contribution of the private sector to GDP (PRIV) indicated a negative correlation with the diversification. We believe that the findings could provide a metric that policymakers can use to establish the necessary strategies to gauge the targeted economic diversity as a pillar of the Vision 2030, and to ensure a strong and sustainable economy.