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

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  • Salaheddine Soummane

    (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique)

  • F. Ghersi

    (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique)

  • Franck Lecocq

    (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique)

Abstract

We implement the hybrid (energy-economy) recursive-dynamic multisector IMACLIM 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 energypricing 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.

Suggested Citation

  • Salaheddine Soummane & F. Ghersi & Franck Lecocq, 2022. "Structural Transformation Options of the Saudi Economy Under Constraint of Depressed World Oil Prices," Post-Print hal-03319116, HAL.
    • Handle: RePEc:hal:journl:hal-03319116
    DOI: 10.5547/01956574.43.3.ssou
    Note: View the original document on HAL open archive server: https://hal.science/hal-03319116v1
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    1. Soummane, Salaheddine & Ghersi, Frédéric & Lefèvre, Julien, 2019. "Macroeconomic pathways of the Saudi economy: The challenge of global mitigation action versus the opportunity of national energy reforms," Energy Policy, Elsevier, vol. 130(C), pages 263-282.
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    12. Soummane, Salaheddine & Ghersi, Frédéric & Lefèvre, Julien, 2019. "Macroeconomic pathways of the Saudi economy: The challenge of global mitigation action versus the opportunity of national energy reforms," Energy Policy, Elsevier, vol. 130(C), pages 263-282.
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    Cited by:

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    2. Anwar A. Gasim & Walid Matar, 2023. "Revisiting Energy Subsidy Calculations: A Focus on Saudi Arabia," The Energy Journal, , vol. 44(1), pages 245-276, January.
    3. Durand-Lasserve, Olivier & Almutairi, Hossa & Aljarboua, Abdullah & Pierru, Axel & Pradhan, Shreekar & Murphy, Frederic, 2023. "Hard-linking a top-down economic model with a bottom-up energy system for an oil-exporting country with price controls," Energy, Elsevier, vol. 266(C).
    4. Elvis K. Ofori & Simplice A. Asongu & Ernest B. Ali & Bright A. Gyamfi & Isaac Ahakwa, 2024. "Environmental impact of ISO 14001 certification in promoting Sustainable development: The moderating role of innovation and structural change in BRICS and MINT, and G7 economies," Working Papers of the African Governance and Development Institute. 24/014, African Governance and Development Institute..

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    More about this item

    Keywords

    Economic diversification; General equilibrium; Oil-exporting country; Climate policy;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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