The Causality Relationships Between the Kingdom of Saudi Arabia’s (KSA) Military Expenditure and Economic Growth in the Period From 1987 to 2019

Abstract

This study aims to test the causality relationships between the Kingdom of Saudi Arabia’s (KSA) military expenditure and economic growth in KSA, by using time-series data in respect of the period from 1987 to 2019. This study applies the Granger causality approach and uses the ARDL bound test approach to test the long-term relationships between the variables. By applying the Granger causality approach, this study’s findings show that the rate of growth rate in KSA’s military expenditure does not result in a similar rate of growth in the country’s Gross Domestic Product (GDP). However, by applying the Granger causality approach, there is a bidirectional causality relationship between the KSA’s military expenditure and the fixed rate of the country’s capital growth.