Do personal remittance outflows impede economic growth in Saudi Arabia? The role of trade, labor force, human, and physical capital.

Saudi Arabia is the leading economy in the Arabian Gulf region; it accounts for a significant amount of remittance outflow (RMO) to the rest of the world. The objective of the study is to investigate the impact of remittance outflow on the economic growth (EG) of Saudi Arabia by utilizing time-series data from 1985 to 2019 controlling trade, labor force, human capital, and physical capital. It employs the non-linear autoregressive distributive lag (NARDL) model, cointegrating regressions, and vector error correction (VEC) Granger causality check to accomplish the study. The outcomes of the NARDL exercise confirm a cointegrating association among variables and reveal that RMO has mixed but negative resultant impacts on the EG in the short run, while in the long run, EC growth is augmented if remittance outflows decline. Both trade and labor force positively contribute to EG, while neither human nor physical capital significantly influences the latter. The cointegrating regression outcomes precisely authenticate the NARDL findings and acknowledge their robustness. Moreover, the VEC Granger causality test also supports the NARDL outcomes. The outcome suggests that the policymakers may allure the expatriates through pragmatic labor laws, policies, and smart incentives to direct their savings to domestic consumption and investments. Moreover, the quality of education in general and tertiary education, in particular, needs to be upgraded in the real sense to develop the practical skills and efficiency of the Saudi labor force so that they can replace the expatriates. This will eventually reduce outbound remittances. [ABSTRACT FROM AUTHOR]