International Journal of Economics and Finance; Vol. 12, No. 12; 2020 ISSN 1916-971X E-ISSN 1916-9728 Published by Canadian Center of Science and Education 61 Measuring the Effect of the Internet on Economic Growth: The Case of Saudi Arabia Hisham J. Bardesi 1 1 Department of Economics, King Abdulaziz University, Jeddah, Saudi Arabia Correspondence: Hisham J. Bardesi, Department of Economics, King Abdulaziz University, Jeddah, Saudi Arabia. E-mail: hbardesi@kau.edu.sa Received: September 15, 2020 Accepted: October 30, 2020 Online Published: November 25, 2020 doi:10.5539/ijef.v12n12p61 URL: https://doi.org/10.5539/ijef.v12n12p61 Abstract The purpose of this study is to examine and assess the impact of the Internet on economic growth in Saudi Arabia. Various studies show that there is a relationship between the growth rate of GDP and the Internet, as estimated by Internet user numbers. In this paper, the ordinary least squares (OLS) model is utilized to study the economic impact of Internet Access from 1994 to 2018, which has had a profound effect on the market structure of many sectors and Saudi’s global macroeconomic performance. The study constructs a model to investigate any significant impact of the Internet on the Saudi economy. Finally, this paper suggests that an understanding of the role of the Internet is essential for policymakers who plan to promote new forms of economic growth in the future. To take a long-term view implies working on technologies that could improve the economy and people’s lives by creating a technological ecosystem in and around Saudi Arabia, along with other major economies. Keywords: economic growth, internet and growth in Saudi Arabia, and transformation economy 1. Introduction In recent years, many major global economies have been going through transformational change; mobile and Internet technologies like Big Data, artificial intelligence (AI), and other innovations are believed to be driving this change. New opportunities and startups are driving evolution and reinventing traditional industries. The drive, in turn, has implications for using information and communication technology (ICT) and the Internet, which has necessitated significant organizational transformations, including economic restructuring and adjustments to commercial and entrepreneurial activities on a global scale. Consequently, there has been a greater demand for investment in improving accessibility to information. One reason is due to the pivotal role which the Internet now plays in every sector of the economy. Moreover, economists now expect that increased investment will be required in information technology (IT) as a principal driver of economic growth. Automation in work processes, as well as investment in startups and companies that promote ICT, has been a significant contributor to growth according to the findings, which have highlighted the cohesion of technology with people’s perception and adoption. It is estimated by The World Bank (2009) that increasing broadband connectivity by 10% would generate a 1.21% average growth in GDP in higher-income nations but an even higher growth rate of 1.38% for low or middle-income nations. Forecasts in 2008 expected the Internet-based economies of G20 countries is about US$ 2.3 trillion or 4.1% of GDP (GSR, 2008); actual figures for 2016 have seen this figure almost double to US$ 4.2 trillion. By reducing the effects of geographical distance whilst augmenting the volume of information available, the Internet is now considered to be a significant economic driver, especially by broadening access to educational resources and increasing employment opportunities (Cyberethics, 2011). Moreover, increased entrepreneurial activities through more excellent Internet connectivity was expected to increase business revenues by 1% and to increase government revenues by 8% (Telenor, 2011). The percentage of individuals using the Internet worldwide increased from 8% in 2001 to 53.6% in 2019 (ITU). This percentage increase is shown in the context of comparisons with developed and developing countries in Figure 1: