Abstract

When an economy is in the midst of a transformation and diversification process, it is hard to assume that its sectoral composition and inter-industry transactions will remain unchanged. This is especially the case since substantial adjustments to a country’s economic structure are at the heart of any restructuring plan. This paper introduces an approach that combines macroeconomic forecasts with the RAS method to produce long-term projections of input-output tables (IOTs), with an emphasis on key targets of Saudi Vision 2030, Saudi Arabia’s blueprint for economic diversification. A significant advantage of the input-output framework is its high sectoral granularity, allowing it to capture the impacts of adjustments to final demand or government policies with respect to individual sectors. Our hybrid approach enables the introduction of different growth paths for the main variables, so that Vision 2030’s transformation plan is reflected appropriately in the projected IOTs. The framework is flexible enough to accommodate sudden adjustments with relative ease, such as the introduction of new technologies or entire sectors into the economy. Saudi Vison 2030 includes a set of targets relating to economic diversification, improved energy efficiency, the introduction of new technologies, social transformation and the support of selected emerging sectors. These policies are expected to have a substantial impact on the Saudi economy, underlining the need for an adequate and flexible tool for projecting and evaluating structural adjustments in the economy.

Authors

David Havrlant

David Havrlant

As a research fellow, David contributes to a better understanding of the current and future economic environment of a changing… As a research fellow, David contributes to a better understanding of the current and future economic environment of a changing region. He is mainly interested in the development of models for policy analysis and forecasting. At the same time, he is involved in projects related to the Vision 2030 program, focusing on the economic transformation and diversification of the Saudi economy. Prior to joining KAPSARC, David worked at the European Commission, European Central Bank, Moody's Analytics and the Czech National Bank. In these institutions, he participated in economic policy analysis, forecasting and research. He also served as a consultant to central banks in the CEE region, managing a variety of economic modeling projects. David led courses in econometrics and operations research during his Ph.D. studies.

Mehmet Ali Soytas

Mehmet Ali Soytas

Former Senior Research Associate Dr. Soytas was a senior research associate in the Policy and Decision Science program. He has previously worked as a… Dr. Soytas was a senior research associate in the Policy and Decision Science program. He has previously worked as a graduate research assistant in the Center for Industry Studies at the University of Pittsburgh, as a consultant for the World Bank, and as an assistant professor of economics at Ozyegin University (Istanbul). During his academic career, he served as a consultant for the Energy Exchange Istanbul, as the reporter of the Turkish Ministry of Development Special Commission on Consumption and Savings, and as the director of the TUSIAD-Ozyegin University Sustainable Development Forum. He has had several research projects funded by the Turkish National Science Foundation, authored numerous articles in the fields of labor economics, economic policy, econometrics, and corporate sustainability, supervised Ph.D. dissertations, and presented at major economic conferences. Dr. Soytas has taught courses on microeconomics, econometrics, statistics, and labor economics at the University of Pittsburgh and at Ozyegin University. He has organized workshops and seminar series, and acted as a referee for many national/international journals, and European and Turkish science foundation grants. He has also been a visiting scholar at Federal Reserve Bank of St. Louis, Washington University in St. Louis, Central Bank of the Republic of Turkey, University of Pittsburgh and Australian National University.

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