Trade openness relationship with macroeconomic factors on Saudi Arabian economy: ARDL application

Abstract

Purpose This paper examines the relationship of financial market inclusion, economic growth, foreign direct investment and real output on trade openness for the Saudi Arabia Economy. Trade openness potentially is a major source of economic growth and development. Design/methodology/approach This study is the first employing mixed methods and approaches of autoregressive distributed lag (ARDL) to estimate the long-run and short-run models for the Saudi Arabia Economy. Findings The results indicate that the inclusion of financial markets has an important role in the short term and has an effect on trade openness on this economy. Practical implications These results listed are only implications for decision-makers to achieve their objectives. Indeed, to have better economic growth, economic and financial decision-makers can rely on financial inclusion and trade openness. Originality/value This article investigates an approach testing the relationship of variables in a short and long term by using annual data from 1990 to 2017 for the Saudi Arabia economy. This paper tests the relationship between finance and economy with an econometric model.