Project Aim

This research program will provide a framework for managing stabilization and sovereign wealth funds in oil-dependent economies, to achieve economic stability and sustainability. Focusing on Saudi Arabia, it will balance maximizing the welfare of households with a focus on the economy.

There are three main problems associated with oil-dependent economies: Oil revenues are highly volatile and uncertain; it is a non-renewable resource. Hence it provides unsustainable streams of revenues. Oil production is a capital-intensive industry generating fewer jobs compared to other manufacturing industries.

Key questions

  • How can a stabilization fund that maximizes the welfare of households be efficiently managed?
  • How can sovereign wealth funds promote economic diversification?
  • What are the trade-offs between investing in the domestic economy and financial assets abroad?
  • What are the macroeconomic implications of domestic and foreign investments by sovereign wealth funds?
  • How can an oil-dependent economy escape the so-called ‘resource curse’?

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