Simulating the effect of counterfactual changes in religious tourism on economic growth in Saudi Arabia

Abstract

PurposeThe literature has well-documented the positive economic effects of both leisure and religious tourism. However, certain events, such as the COVID-19 pandemic and others, can impair the positive effect. Hence, the purpose of this study is to simulate the effect of counterfactual changes in religious tourism on Saudi Arabia’s economic growth during the MATAF expansion project and the COVID-19 pandemic.Design/methodology/approachThe study employs novel dynamic autoregressive distributed lag (DARDL) and kernel-based regularised least squares (KRLS) estimation techniques to analyse data spanning 1970–2022.FindingsThe results refuted the positive effect of spiritual tourism, especially during the two events. The simulation results show that a shock in predicted religious tourism will lower economic growth marginally in the short term but substantially in the long run.Practical implicationsThe Saudi Arabian government should prioritise strategic infrastructural development such as expanding roads, airports and renovating worship centres during periods of low demand to promote economic growth through religious tourism. This will allow for the accommodation of a growing number of pilgrims without disrupting religious activities. In addition, it is imperative for the government to engage in international cooperation with other governments to proactively avert future pandemics such as the COVID-19 pandemic.Originality/valueEven though many studies have examined the effect of religious tourism on economic growth, to the best of our knowledge, this study is the first one that simulates the effect of counterfactual changes in religious tourism on economic growth during the MATAF expansion project and the COVID-19 pandemic.