The impact of foreign trade policies on the Saudi Arabian economy: A dynamic computable general equilibrium analysis

This dissertation analyzes the effects of different trade policies on the economic growth rate of Saudi Arabia. A partially adaptive dynamic Computable General Equilibrium model (CGE) is adopted in order to evaluate policy options and assess the impact of policy changes on resource allocation and growth rate over a ten-year period. Based on the assumptions of a typical neoclassical CGE model, this study found that a gradual trade liberalization provided the advantages of an improvement in the welfare of the society as well as improved national income and trade balance of the Saudi economy. In contrast, the protection policy led to the opposite effects of gradual trade liberalization. A number of limitations should be taken into consideration, however, due to the fact that the realities of the Saudi Arabian economy are more complex than this model can capture. In addition, the scope of this study is limited by the many assumptions usually involved in both the neoclassical model and the General Equilibrium Models.