Do Religious Tourism and Institutional Quality Matter for the Thriving Economy? Empirical Evidence in the Context of Saudi Arabia Vision 2030

Abstract

Economic development is fueled by tourism through partnerships with other governments. The revolutionary potential of Vision 2030 is further increased by religious tourism, a gift for Saudi Arabia's economic growth. Better institutional qualities are what drive increased growth. Thus, evaluating the association between financial growth and Saudi Arabia's formal quality as well as the effect of religious tourism on the latter constitute the study's two key objectives. An ARDL approach, the Granger causality test, the panel cointegration approach, government consumption, savings, trade liberalization, political instability index, and religious tourism (Muslims traveling to perform the hajj and umrah) are applied to analyze the complex affiliation between these factors and financial growth from 2002 to 2019. The analysis's result identified numerous short- and long term consequences. The paper's findings demonstrate a robust and favorable relationship between economic development and institutional quality, government saving and consumption, and both domestic and international travel. Nonetheless, both in the short and long terms, political stability is irrelevant. The study highlights the potential for developing Islamic travel itineraries that would uphold Islamic traditions at destination.