Open AccessUsing a Standard Model to Identify the Saving Determinants in the Kingdom of Saudi Arabia
Author(s) -
Tarek Ali Ahmed Abdallah,
Mohammed Salah El-Din Abdel Aziz
Publication year - 2021
Publication title -
asian journal of education and social studies
Language(s) - English
Resource type - Journals
ISSN - 2581-6268
DOI - 10.9734/ajess/2021/v18i430449
Subject(s) - gross domestic product , investment (military) , economics , product (mathematics) , gross regional product , unemployment rate , unemployment , demographic economics , gross private domestic investment , population , economic growth , macroeconomics , return on investment , mathematics , economy , environmental health , medicine , open ended investment company , geometry , production (economics) , politics , political science , law
Low savings are an important factor in low economic growth rates. Saudi Arabia faces many future challenges, e.g., maintaining the gross domestic product, improving economic growth rates, providing job opportunities, as well as decreasing unemployment and nationalization rates. Therefore, the present research paper aims to identify the most important factors affecting domestic savings in Saudi Arabia by building a simultaneous equations model to measure interactions and interrelations between variables using 3SLS. The results showed a significant positive interaction between variables. Increasing domestic savings by 1% increased local investment by 0.957%, whereas increasing the investment coverage ratio by 1% increased local investment by 0.971%. Moreover, increasing local investment by 1% increased gross domestic product by 0.136%, while decreasing the rate by 1% increased gross domestic product by 0.334%. Increasing population by 1% increased gross domestic product by 1.520%. In short, these factors conveyed high rates of response.