ICT and Economic Growth Nexus in Saudi Arabia, Controlling Human Capital in the COVID-19 Era: A NARDL Exercise

Abstract

ICT use has significantly increased over the years across the world, including Saudi Arabia. This study links ICT with economic growth (EG) in Saudi Arabia, controlling human capital (HC) and COVID-19. We employ time-series annual data from 1990 to 2021, a nonlinear Autoregressive Distributed Lag (NARDL) approach, and a cointegrating regression analysis to look at the asymmetric effects of ICT diffusion on EG. The NARDL assessment establishes a cointegrating relationship among variables; the effect of ICT negative shocks on EG is favorable and relatively larger. In contrast, the positive shocks of ICT generate a negative and somewhat less impact on EG with an overall positive impact. The findings imply that the ICT, during its expansion stage, cannot contribute positively to EG, perhaps because of a lack of required skilled human capital to administer and utilize the ICT instruments. The positive and insignificant coefficient of HC supports this conclusion. Despite Saudi Arabia’s generous efforts, physical and human capital have no significant impact on EG. COVID-19 has hindered the usual economic activities in the Kingdom and impaired EG. The cointegrating regressions authenticate the robustness of the NARDL findings. The outcomes suggest policymakers should appraise the existing ICT infrastructure and initiate raising the capability of HC through practical training and education to benefit from ICT diffusion and positively impact EG.