Comparison study in inflation and economic development between Egypt and Saudi Arabia: Using data analysis

Abstract

An increase in total demand over the natural supply causes inflation in Egypt. Currently, the government is not intervening to reduce prices, unlike Saudi Arabia, which does interfere. The government's direct aim is to limit the price rise, known as suppressed inflation. This study discusses the relationship between the inflation indicator and various dimensions of economic development (such as production, agriculture, industry, dependency, health, and education) in Egypt and Saudi Arabia from 1990 to 2022. The study found that inflation in Egypt was at a high rate during the study period, with an average of 9.9 %. This high average negatively affects four dimensions of development in Egypt: agriculture, dependency, health, and education. It positively impacts industry and production, but the positive impact is minimal compared to the adverse effects. The negative impact is powerful on the dimensions of education and health, which are related to the human element and have a primary influence on all other dimensions of economic development. This indicates the failure of the policy to combat inflation in Egypt and reduce its adverse effects on economic development dimensions. On the other hand, Saudi Arabia had a lower average inflation rate of 1.9 % during the study period, which negatively affected the health dimension of economic development but positively affected the dimensions of education and industry. The dependency dimension, measured by the external debt growth rate index, was excluded since there were no external debts with recursion.

Keywords

• Inflation
• Dickey-Fuller test statistic
• Statistical analysis
• Production
• Variance inflation factors test
• Cointegration test