Structural Transformation Options of the Saudi Economy Under Constraint of Depressed World Oil Prices

Salaheddine Soummane, Frédéric Ghersi and Franck Lecocq ()

The Energy Journal, 2022, vol. 43, issue 3, 185-204

Abstract: We implement the hybrid (energy-economy) recursive-dynamic multisector IMA-CLIM model with important adaptations to Saudi macroeconomics. We design two scenarios reflecting both the Saudi Vision 2030 economic development program and Nationally Determined Contribution (NDC) to greenhouse gas mitigation: Continuity of previous plans to expand energy-intensive activities under maintained energy-pricing policies, versus Transformation by economic diversification away from hydrocarbon-related activities and fiscal and energy-pricing reforms. We show that, compared to Continuity, Transformation improves activity, employment and public budget outlooks, while considerably abating the energy intensity of GDP and total CO2 emissions. Our results thus point at the relevance of economic diversification as both a hedging strategy against international climate change mitigation depressing oil markets and a national climate mitigation strategy for Saudi Arabia. However, the successful advancement of the reforms necessary for diversification remains conditional to setting a suitable institutional framework for a competitive economy.

Keywords: Economic diversification; General equilibrium; Oil-exporting country; Climate policy (search for similar items in EconPapers)
Date: 2022
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Journal Article: Structural Transformation Options of the Saudi Economy Under Constraint of Depressed World Oil Prices (2022)
Working Paper: Structural Transformation Options of the Saudi Economy Under Constraint of Depressed World Oil Prices (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:43:y:2022:i:3:p:185-204

DOI: 10.5547/01956574.43.3.ssou

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