Non-oil Revenue Impact on Economic Growth: Empirical Study of Saudi Arabia’s Economy

Abstract

The kingdom of Saudi Arabia saw during the year 2019 an improve in its business environment, as indicated in the World Bank Ease of Doing Business 2020 report in which the Kingdom was the best reformer, gaining 30 places to place itself  in 62^nd position. 62% of the three hundred planned reforms in this area have been completed, including a new law on tenders and public procurement, new commercial courts, and a new concurrence law and planned laws on public-private partnerships. The country has recently released the VAT regulation for public consultation through the tax authority (GAZT) website. The VAT introduction presents an important policy in a country where economic system has always relied on oil revenues. The purpose of this study is to show the marked contrast between the impact of non-oil tax revenue (NOTR) and non-oil non-tax revenue (NONTR) on economic growth in Saudi Arabia.

This study applied various essential statistical tools such as descriptive and correlation, paired sample t-test. The results demonstrate that NONTR and NOTR were positive and firmly associated with Nominal domestic product with Co-efficient(r=.888, p >0.05) and (r=.960, p <0.05). The findings outline a significant divergence between the impact of NONTR and NOTR on nominal gross domestic product as shown (t₃=23.310, p<0.05) and (t₃=23.099, P< 0.05) based on four years of data from 2016-2020. In this paper, we try to explore the revenue composition of Saudi Arabia and its impact on its economy.