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Diversification in sight? A macroeconomic assessment of Saudi Arabia’s vision 2030

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  • Moreau, Flavien
  • Aligishiev, Zamid

Abstract

Saudi Arabia, currently the world’s largest oil exporter, embarked since 2021 on a large-scale National Investment Strategy (NIS) designed to lift potential GDP growth by diversifying the economy. This article describes the strategy and is the first paper that quantifies its impact on growth using a dynamic general equilibrium model. It also decomposes this impact into two main channels: the direct impact of the investment push and the impact of complementary reforms. We find that the overall strategy – when supported by appropriate fiscal measures, labor supply reform, and higher public sector efficiency – could boost potential non-oil growth by 4.8 percentage points to about 8.8 percent in the medium term. We also assess the growth dividends of a wider range of alternative scenarios around the NIS baseline.

Suggested Citation

  • Moreau, Flavien & Aligishiev, Zamid, 2024. "Diversification in sight? A macroeconomic assessment of Saudi Arabia’s vision 2030," International Economics, Elsevier, vol. 180(C).
    • Handle: RePEc:eee:inteco:v:180:y:2024:i:c:s2110701724000611
    DOI: 10.1016/j.inteco.2024.100538
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    More about this item

    Keywords

    Economic diversification; Public investment; Potential GDP growth; Sovereign wealth funds; DSGE;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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