Publication Date

2019-07-25

Availability

Embargoed

Embargo Period

2021-07-24

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PHD)

Department

Industrial Engineering (Engineering)

Date of Defense

2019-07-18

First Committee Member

Nazrul I. Shaikh

Second Committee Member

Seok G. Lee

Third Committee Member

Shihab S. Asfour

Fourth Committee Member

Murat Erkoç

Fifth Committee Member

Emrah Celik

Abstract

Oil is the primary source of income for the Kingdom of Saudi Arabia (KSA); fluctuations in prices have a direct impact on KSA’s economy. Large fluctuations, usually sudden dips in oil price such as those seen in 2015 when oil prices dropped to below $40 per barrel, are leading to large deficits in KSA’s economy (on the order of $103.626 billion in 2015). These fluctuations and resulting deficits result in social and economic uncertainty and unrest. KSA is, therefore, attempting to make systematic investments in infrastructure and technology to make its economy less susceptible to fluctuations in oil prices. The objective of this dissertation is to study the KSA economy, identify the economic growth drivers (tourism, defense, healthcare, etc.), and identify how an oil shock affects the economy and the economic growth drivers. Such an analysis will lay the foundation for systematic investments in infrastructure and technology. This dissertation has four phases. Phase I builds a rich, structured, and integrated database of variables that are representative of KSA’s economic growth; this database helps to overcome the lack of publicly available economic data that is a result of the low level of economic liberty within KSA. Phase II provides a comprehensive data-driven understanding base of the current economic system through quantification of the impact of KSA economic drivers on Gross Domestic Product (GDP). Phase III estimates the regional GDP contribution. Phase IV determines the between-regions flow drivers and analyzes the economic response to oil-shock, uses the mathematical outputs of the preceding two phases to propose a novel framework, that consists of a combination of multilayer networks concept and single-index models, to build a multidimensional network-based representation of the KSA economy. The proposed framework in Phase IV continues with the interconnected relationships among the subsystems, that is, networks that constitute KSA’s economy, and compresses them into an efficient aggregated network that allows for full access to network theory algorithms, and assesses the resilience status of the economy at the macro and regional levels. The previous fluctuations in economic liberty hindered the acquisition of in-depth knowledge of KSA’s current economy. Exploring the current system’s infrastructure and defining its determinants, role, and dynamic behavior will open new doors for planning of stabilization policies and investments. Much of the current literature on regional economic resilience has been conducted for well-developed economies, while countries that heavily depend on single-resource income are neglected. This fact changes the researchers’ interpretation of regional resilience, which varies with the nature of the system one is targeting and the threat of exogenous disruption. Also, classic stabilization policies usually use a certain classic monetary measure such as GDP to represent economic functionality, that is, resilience. The intellectual contribution of this dissertation is that it provides a novel resilience framework that (a) is designed to involve modern economic development factors that are usually neglected in many economic studies, (b) is capable of modeling more realistic interactions to enable traceability of hidden interdependences among regions, which undoubtedly impact decision-making processes and outcomes, and (c) provides an advantage, given the current golden opportunity of reform, for implementing a systematic data-based strategy for tolerating oil shocks. These results are then used to propose an investment roadmap that can positively change the face of the current Saudi economy, and enable stabilization policies that prevent oil prices from threatening KSA’s stability and its inhabitants’ quality of life. This new resilience framework will not be limited to the regional economic field, nor to a naïve understanding of resilience, that is, against natural disasters and financial crises. On the contrary, it can be adapted to many other fields that are composed of aggregated systems that consist of multi-interconnected subsystems to increase resiliency against any random or strategic distribution.

Keywords

Regional Resilience; Saudi’s Economy; Oil Shocks; VISION 2030; GDP Contribution; Resilience Roles

Available for download on Saturday, July 24, 2021

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