Analyzing GDP Growth Drivers in Saudi Arabia: Investment or Consumption: An Evidence-Based ARDL-Bound Test Approach

Round 1

Reviewer 1 Report

This research explores the impact of consumption and investment on economic growth. While the econometric model based on time series is interesting, I don’t think that it was built on strong theoretical considerations. My main points are:

1.      The authors should be aware that the determinants of economic growth are based on shifters of supply. In the short run, it is affected by investment. And in the long run, by population growth, rate of technology development and human investment. See for example the work of Robert Solow. Consumption is really a shifter of aggregate demand. It can induce growth only in the short run. But in the long run, when the economy is in full employment (or potential output), consumers does not affect growth. On the contrary, it only creates inflation. I would like the authors to explain why they have omitted the traditional drivers of growth in their study. They also should develop some literature review on the theory of economic growth. This may help to justify the empirical model. 

2.      In addition, if the economy is not in full employment, companies may have inventory accumulation. Consequently, and increase in demand does not necessarily triggers economic growth, it can also reduce the inventory accumulation which is not equivalent of growth. Without acknowledging this fact, it is difficult to interpret the results of this investigation. The authors should reflect on this.

3.      The econometric model is not convincing in theoretical terms. The dependent variable (real GDP) is a variable of supply, but the independent variables are variables of aggregated demand. Yes, this would only hold in equilibrium, when aggregated supply meets aggregated demand. But in full employment, real GDP will not be affected by variables of demand. This is why I am not convincing about how the model was designed.

4.      While the authors discuss some aspects of sustainability, I think this debate is too light for a journal focused on Sustainability. This should be expanded.

Author Response

Dear Reviewer

Thank you very much for taking the time to review this manuscript. Please find the detailed responses below and the corresponding revisions/corrections highlighted/in track changes in the re-submitted files.

Best Regards

Dr. M. Mohammed

Author Response File: Author Response.pdf

Reviewer 2 Report

In the article, the authors raised important issues regarding the interrelationships between economic growth, consumption and investments. The article is interesting and has great substantive value. However, in some respects it can be improved.

Comments:

1. The summary lacks a clearly defined purpose of the study. Did the researchers establish a hypothesis at the beginning of the study? It is worth taking into account the hypothesis, what did the authors want to prove through the study? In the summary, you can also write more about the methods used and the conclusions in a more systematic way.

2. The introduction would be more readable if Figures 1 and 2 were moved to the literature review. And in the introduction you can include important information about why the problem is important, goals, hypotheses and the layout of the article.

3. Figures 1 and 2 would be more readable if data labels were included.

4. The econometric methodology is clearly described.

5. It is worth correcting the data in table 1 to make the content more readable, e.g. moving the content of the first row to the appropriate places.

6. CV coefficient of variation should be presented in %, why is the value presented with so many decimal places? And how was it calculated? The coefficient of variation is very low.

7. A similar comment applies to table 3. The results contain so many decimal places unnecessarily, 2-3 places are enough. Even one or two decimal places indicate whether the relationship is significant or not. It is worth improving the readability of the tables.

8. Similar comments apply to the following tables.

9. There is no discussion of the results.

Author Response

Dear Reviewer

Thank you very much for taking the time to review this manuscript. Please find the detailed responses below and the corresponding revisions/corrections highlighted/in track changes in the re-submitted files.

Best Regards

Dr. M. Mohammed

Author Response File: Author Response.pdf

Reviewer 3 Report

The topic on factors influencing Saudi Arabia's growth is relevant.

The title does not explain what ARDL is.

It is not clear from the title whether it is a methodological article or not.

The introduction is not clear about the research questions and does not refer to previous literature calling for research.

There are some sentences that are difficult to read, for example lines 64 and 65.

The authors do not use previous literature to establish hypotheses.

It is not made clear why the methodology used is adequate.

The results are not clarified in terms of the research problem.

It would be advisable to open a discussion section on the results and make clear the contributions to the previous literature in theory and practice.

The limitations of the article are not made clear

There are some sentences that are difficult to read, for example lines 64 and 65.

Author Response

Dear Reviewer

Thank you very much for taking the time to review this manuscript. Please find the detailed responses below and the corresponding revisions/corrections highlighted/in track changes in the re-submitted files.

Best Regards

Dr. M. Mohammed

Author Response File: Author Response.pdf

Reviewer 4 Report

Comments:

Technical comments:

1. The unit root results confirm that the variables used in this paper are not stable. This also means that the following analysis by the author is invalid. Granger causality tests, DOLS, etc. are valid only if all variables are stable.

2.  The overall structure, such as tables and formulas, is very basic and does not conform to the format of academic papers.

and so on.

Content comments:

1. The research does not have a robust theoretical basis that effectively connects the conceptual framework with the empirical inquiry. The book lacks a thorough explanation of the theoretical processes that govern the linkages among investment, consumption, and GDP growth in Saudi Arabia. This gap diminishes the study's impact on current research about factors influencing economic development.

2. The rationale for using the ARDL-bound testing strategy and other econometric approaches such as VECM and Granger causality is not well explained. The report lacks detailed information on the diagnostic tests conducted to validate the effectiveness of these techniques. The study's methodological rigor is compromised by the lack of a thorough explanation of the selection criteria for variables and the possibility of endogeneity concerns.

3. The manuscript's analysis of the empirical data is too basic and fails to address the intricacies of the economic development process in Saudi Arabia. The results lack a detailed analysis of how investment and consumption relate to other economic issues. Furthermore, due to Saudi Arabia's unique economic framework heavily reliant on oil earnings, the study's policy recommendations are broad and lack particular insights relevant to the Saudi situation.

4. The manuscript has several structural, grammatical, and typographical flaws that impede its readability and academic quality. The main points and parts of the book, such as the literature review and debate, lack coherent articulation, resulting in a fragmented narrative. The manuscript's lack of clarity and consistency hinders its capacity to make a substantial contribution to the discussion on economic development factors in Saudi Arabia.

 Extensive editing of English language required

Author Response

Dear Reviewer

Thank you very much for taking the time to review this manuscript. Please find the detailed responses below and the corresponding revisions/corrections highlighted/in track changes in the re-submitted files.

Best Regards

Dr. M. Mohammed

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

The author has made satisfactory improvements and useful clarifications. I am satisfied with most of the replies to my comments. However, I am still not convinced by the answer to my third comment. I invite the author to expand his/her argument in relation to the econometric model design. I still do not fully understand how determinants of aggregate demand could affect output in full employment. To see the point, imagine a country as a farm. If all resources and inputs are fully employed, how could this fictional country be able to produce more in response to an increase in the number of customers/demanders? Have you consider that your model is really a short-medium run model?

Author Response

Dear Reviewer

Having a good day

I greatly appreciate your valuable time spent on reviewing this manuscript. Kindly find below the comprehensive responses along with the corresponding revisions and corrections, which have been highlighted or tracked changes in the re-submitted files.

best regards. 

Author Response File: Author Response.pdf

Reviewer 2 Report

The article has been corrected.

Author Response

Dear Reviewer

Having a good day

I greatly appreciate your valuable time spent on reviewing this manuscript. Thank you very much for your kind and valuable comments.

yours

Dr. M. Mohammed

Reviewer 3 Report

The title is too long, I would leave it at: Analyzing GDP Growth Drivers in Saudi Arabia:

It would be good if the authors could revise comment 5 with respect to adding literature to support their discourse.

As well as comment 6 which refers to supporting the methodology by basing it on previous studies that have successfully applied it.

ok

Author Response

Dear Reviewer

Having a good day

I greatly appreciate your valuable time spent on reviewing this manuscript. Kindly find below the comprehensive responses along with the corresponding revisions and corrections, which have been highlighted or tracked changes in the re-submitted files.

Best regards

Author Response File: Author Response.pdf

Reviewer 4 Report

Comments:

# Comment 1: Ln(X-M) is not stationary at both the current level and its first order difference.  This will invalidate the following empirical analysis results. Although the authors claim that the first-order difference of the variables is stationary, the subsequent analysis by the authors did not use the data after the first-order difference for empirical analysis.

Content Comments:

# Comment 1: The author's feedback is abstract. The authors need to elaborate on specific modeling and theoretical foundations.

# Comment 2:  There are some errors in this parts. For example, in Table 7, there are at most two cointegrations. But the results suggest at most four cointegrations. In Table 8, D(lnG) is significant at 10% level. But the anhors tell readers that  D(lnG) is insignificant in statistics, and so on....

New comments:

1. Table 11's results suggest that there is no causal relationship among these variables under consideration. Therefore, the research in this paper is meaningless.

2.  The results of Table 4 suggest that investment negatively affects RGDP. Why?

and so on.

Author Response

Dear Reviewer

Having a good day

I greatly appreciate your valuable time spent on reviewing this manuscript. Kindly find below the comprehensive responses along with the corresponding revisions and corrections, which have been highlighted or tracked changes in the re-submitted files.

Best Regards

Author Response File: Author Response.pdf

Round 3

Reviewer 1 Report

I am satisfied with the answer of the authors. I think this is an interesting article and good to see that they have made the point of the limitations when operating in full employment.

Reviewer 3 Report

Congrats

Author Response

Dear Reviewer

Thank you very much for taking the time to review this manuscript. I appreciate the worth guidelines and continuous support that ended by very rich and novel work. In fact your comments enlarged my scope in the theme as well as knowledge.

Deeply thanks

Dr. M, Mohammed

Reviewer 4 Report

Comments:

There are some technical issues that need to be taken into consideration.

1.  The correlation between lnI and LnGDP is quite weak. why?

2. The results of Table 4 suggest that lnG has no effect on lnGDP. Why?

3. The results of Table 4 suggest that lnI negatively affect lnGDP. Why?

4. The results of Table 5 suggest that Dln(X-M) is not stationary. Why the p-value=0.000?

5. The results of Table 8 suggest that DlnC, DlnG, and Dlin(X-M) have no effects on lnGDP. Why?

6. The results of Table 11 are completely wrong. The null hypothesis is that variable X does not Granger-cause variable Y.

Author Response

Dear Reviewer

Thank you very much for taking the time to review this manuscript. Please find the detailed responses below and the corresponding revisions in track changes in the re-submitted files.

M. Mohammed

Author Response File: Author Response.pdf

Round 4

Reviewer 4 Report

Thank you very much for your kind responses.

I have no additional comments.

Best regards,

Author Response

Dear Reviewer

Thank you very much for taking the time to review this manuscript. Please find the detailed responses below and the corresponding revisions/corrections highlighted/in track changes in the re-submitted files. You may find the correction in lines 580 - 584 and lines 594 - 600.

Deeply thanks

Dr. M, Mohammed

Author Response File: Author Response.pdf

Round 5

Reviewer 4 Report

I have no additional comments.