The Impact of Economic Complexity on Economic Development in Saudi Arabia (1991–2021)
Authors:
Eman Saad AlOtaibi(1),
Dr. Mohamed Abd ElNaby Mohamed Sallam (2)
Abstract: This study aimed to measure the effect of the Economic Complexity Index (ECI) on economic development by constructing a composite variable representing economic development. It also included the average oil prices as a control variable, given the critical role oil prices play in supporting economic development in the Saudi economy. The study utilized data from the period 1991–2021 and demonstrated the existence of a cointegrating relationship between the study variables in both the short and long run using the Autoregressive Distributed Lag (ARDL) methodology through the Bounds Test. The results indicated a positive but statistically insignificant relationship at the 5% significance level between economic complexity and economic development in the short run. However, in the long run, the relationship was positive and statistically significant at the 5% level. Additionally, the control variable (oil prices) had a positive and significant effect on economic development in the long run. The findings from the product space analysis revealed that Saudi Arabia possesses untapped knowledge and productive capabilities for manufacturing various complex products, particularly in the chemicals and machinery sectors. Furthermore, Saudi Arabia achieved an advanced ranking in the Economic Complexity Index, surpassing developed G20 countries such as Russia, Spain, Canada, and Australia in 2021. Keywords: Economic Development, Economic Complexity, Average Oil Prices, Saudi Arabia, Product Space, Competitiveness. 
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Academic Journal of Research and Scientific Publishing
doi.org/10.52132/Ajrsp.e.2025.69.4 