Analyzing the interplay of urbanization, economic development, and seaborne trade: Revealing their connection to urban resilience in Saudi Arabia

Urbanization is widely acknowledged as a significant driver of a nation's economic growth and participation in global trade. However, there is considerable debate regarding the sequence of events: whether urbanization fosters economic development and, subsequently, trade, economic growth, and trade precede urbanization, or whether there is a reciprocal relationship between them. Each perspective has its theoretical underpinnings, necessitating empirical evidence to discern the causal direction, which holds significant policy implications. This research explores the relationship between urbanization, economic development, and trade over the short and long term. Through a comprehensive examination utilizing cointegration and Granger causality tests conducted on data from Saudi Arabia from 1991 to 2022, the study first establishes the integration order of the variables. Subsequently, it employs the Autoregressive Distributed Lag (ARDL) and Error Correction Model (ECM) techniques to unravel short-term and long-term causal dynamics. The findings unveil a relationship between urbanization and economic development, with evidence pointing to bidirectional causality between these variables across both short and long terms. Regarding the relationship between trade and economic development, while short-term causality flows in both directions, the long-term analysis suggests a unidirectional relationship between trade and economic development. This implies an indirect linkage between trade and urbanization through GDP, as no direct causality between trade and urbanization is evident. Finally, this paper uncovers this interactive connection to urban resilience. • The research reveals a connection between urbanization and economic development, indicating a bidirectional causal relationship over both short and long periods. • Concerning trade and economic development, short-term causality operates bidirectionally, whereas long-term analysis suggests a one-way relationship from trade to economic development. • This suggests an indirect connection between trade and urbanization through GDP, as no direct causal link between trade and urbanization is apparent. • Strong evidence supports an intertwined relationship between this correlation and urban resilience.