The Determinants of Non-Oil Exports Competitiveness in the Kingdom of Saudi Arabia

Abstract

This study examines the determinants of non-oil export competitiveness in Saudi Arabia, with a particular focus on the long-term and short-term dynamics from 2000 to 2023. Using a Vector Error Correction Model (VECM), the research identifies trade openness, the real effective exchange rate (REER), and control of corruption as significant long-term drivers of non-oil export performance, aligning with the objectives of Saudi Vision 2030. The findings emphasize the importance of open trade policies, exchange rate stability, and institutional reforms in fostering export competitiveness. In the short run, the impact of these variables is limited, suggesting that immediate policy interventions may not yield quick results without comprehensive structural changes. The study concludes that long-term strategies targeting economic diversification, improved governance, and stable exchange rate policies are crucial for sustaining non-oil export growth. Policy recommendations include further integration into global value chains, enhancing all factors of export competitiveness, and expanding Saudi Arabia's participation in regional trade agreements.