| Author(s) | Khalid H.A. Al-Qudair |
| Affiliation | Associate Professor, Department of Economics, College of Administrative Sciences, King Saud University |
| Title | Testing Kaldor's Hypothesis of the Relationship between Industrial Production and Economic Growth in the Kingdom of Saudi Arabia |
| Source | Journal of King Saud University. Administrative Sciences. Volume 17, No 2. (2005/1425) |
| Abstract | This study examines Kaldor's hypothesis of the causal relationship between industrial production and gross domestic product in the Kingdom of Saudi Arabia using Cointegration and Vector Error Correction Model (VECM) techniques in order to determine the long run equilibrium relationship and the direction of the causality in both the long and the short run. The Cointegration test indicates the existence of long run equilibrium between industrial production and gross domestic product. The causality tests based on VECM indicate that there is a uni-directional causality relationship running from industrial production to gross domestic product in both the long and short run. This result coincides with Kaldor's hypothesis of the causal relationship that runs from the industrial production to gross domestic product in the Kingdom of Saudi Arabia which reflects the promising role of industrial production in the future in determining the growth rate of the economy with further expected expansion of the industrial base. |
