THE IMPACT OF DIGITAL ECONOMY ON GREEN GROWTH IN THE KINGDOM OF SAUDI ARABIA

Apstrakt

In the background of the rapid development of the digital economy,

Saudi Arabia is facing an imperative necessity to transition to green

and sustainable growth from traditional growth patterns, as per its Vi-

sion 2030 ambitions. This study examines how the digital economy

impacts green growth in Saudi Arabia during 1996–2022, addressing

both environmental sustainability and inclusive development. The

study uses reliable data from international sources such as the OECD,

WDI, and Heritage.org, and applies cointegration tests along with

Bayesian methods to estimate a vector autoregression model (BVAR)

to investigate the relationships between digitalization (DESI), trade,

corruption, and population growth in relation to green growth.

The empirical findings strongly support the hypothesis that digitali-

zation significantly contributes to green growth in the long term, pri-

marily by inducing structural transformation and greater sustainabil-

ity. DESI emerges as a strong and growing determinant, explaining

14.24% of variation in green growth in the long run—just after trade.

Historical decomposition also highlights that the positive impact of

digitalization was most prominent between 2005 and 2015, matching

a global digital shift. The analysis also gives interpretative proof of the

role of the digital economy in inclusive green growth as better gover-

nance and less corruption appear to mediate this relationship.

The evidence confirms that while digitalization has giant potential to

drive green growth, the success will lie in mainstreaming sustainabil-

ity in digital policy, green investment in technology, and the align-

ment of trade and labour policies with green priorities. Policymakers

should ensure that digital transformation is accompanied by proper

institutional reforms and inclusive planning to realize an equitable and

sustainable green transformation in Vision 2030.