Tourism-Led Employment Nexus In Saudi Arabia: An ARDL Analysis Of Vision 2030 Diversification Impacts
DOI:
https://doi.org/10.63278/jicrcr.vi.3426Abstract
This paper investigates the dynamic relationship between job creation and the development of Saudi Arabia’s tourism sector within the Kingdom’s Vision 2030 framework. Employing the Autoregressive Distributed Lag (ARDL) bound testing and the associated error correction model, the paper empirically examines both short–run and long–run effects of the key determinants, including tourist arrivals, tourism infrastructure investment, public expenditure, private sector investment expenditure, and Vision 2030 structural reforms. The model proves a stable long-run co-integrating relationship among the study's variables, supported by robust diagnostic tests and a statistically significant error correction term.
The empirical results reveal that tourist arrivals, Vision 2030-aligned infrastructure investment, and private capital expenditure have a significant positive impact on long-run employment. On the other hand, public investment shows a negative long-run impact, demonstrating crowding-out dynamics or inefficiencies. The short-run results reveal a positive role for tourist arrivals and private sector engagement as drivers of employment. While the interaction term that captures infrastructure investment in tourism under Vision 2030 showed a marginal, but significant, positive influence on employment, suggesting that recent policy-driven infrastructure improvements are the most influential external driver.
Tourism-led employment is mostly self-sustaining according to the variance decomposition and Impulse response analysis, with Vision 2030 infrastructure investment standing out as the most significant external determinant.
Strategic policy reforms, such as emphasizing private sector engagement, enhancing the effectiveness of public sector expenditure, and prioritizing infrastructure investment aligned with national development goals, must be implemented to optimize the employment potential of Saudi Arabia’s tourism sector.
