Real exchange rates and competitiveness

Lipschitz, Leslie; McDonald, Donogh

doi:10.1007/bf00924805

Cited by 44 publications

(7 citation statements)

References 4 publications

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“…The relatively larger magnitude of the elasticity than unity indicates that Saudi Arabian nonoil exports are elastic to the REER. The REER is theoretically and empirically considered a primary measure of an economy's international trade competitiveness [81][82][83][84][85]. The sign of this finding indicates that the appreciation (depreciation) of the national currency can harm (support) Saudi Arabia's exports, which is consistent with export theory (see Equation (A9) in Appendix A).…”

Section: Discussionsupporting

confidence: 53%

Saudi Non-Oil Exports before and after COVID-19: Historical Impacts of Determinants and Scenario Analysis

2022

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The diversification of the economy including its exports is at the core of Saudi Vision 2030. The vision targets to raise non-oil export from 16% to 50% of non-oil GDP by 2030. Achieving this, in addition to other goals, necessitates a better understanding of the non-oil export relationship with its determinants. However, we are not aware of a study that estimates the impacts of the determinants on Saudi non-oil exports covering the recent years of reforms and low oil prices and that conducts simulations for future. The purpose of this study is to develop an econometric modeling framework for Saudi non-oil export that can enhance informing the policymaking process through empirical estimations and simulations. For estimations, we applied cointegration and equilibrium correction methodology to the annual data for the period 1983–2018. Results show that Middle Eastern and North African countries’ GDP, as a measure of foreign income, and Saudi Arabia’s non-oil GDP, as a measure of production capacity, have statistically significant positive effects on Saudi non-oil exports in the long run. The real effective exchange rate (REER), as a measure of competitiveness, also exerts a positive effect in the long run if it depreciates and vice versa. Furthermore, our findings support the Export-led growth concept, which articulates that export can be an engine of economic growth and does not support the Dutch disease concept, which highlights the consequences of the resource sector for the non-resource tradable sector for Saudi Arabia. Macroeconometric model-based simulations conducted up to 2030 reveal out that the Saudi non-oil export is more responsive to the changes in REER than any other determinants. The simulation results also show that non-oil manufacturing makes a three times larger contribution to the future expansion of non-oil exports than agriculture. Moreover, the simulations discover that finance, insurance, and other business services, as well as transport and communication play an important role in improving the Saudi non-oil export performance in the coming decade. The key policy recommendation is that measures should be implemented in a coordinated and balanced way to achieve non-oil exports and other targets of the Vision.

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Section: Discussionsupporting

confidence: 53%

Saudi Non-Oil Exports before and after COVID-19: Historical Impacts of Determinants and Scenario Analysis

2022

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“…In this context, the real exchange rate is the most commonly used measure of cost and price competitiveness (Lipschitz and McDonald 1992;Arghyrou and Chortareas 2006). In a monetary union with a common currency, the real exchange rate only depends on changes in relative prices between countries.…”

Section: The Competitiveness Approachmentioning

confidence: 99%

Current Account Balances and Structural Adjustment in the Euro Area

2010

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“…The relatively large magnitude of the elasticity indicates that Saudi Arabian non-oil exports are highly responsive to the REER, a measure of price competitiveness. The REER is theoretically and empirically considered a primary measure of an economy's international trade competitiveness (e.g., Balassa [1964]; Di Bella, Lewis, and Martin [2007]; Lipschitz and McDonald [1992]; Samuelson [1964Samuelson [ , 1994). The sign of this finding indicates that the appreciation (depreciation) of the national currency can harm (support) Saudi Arabia's exports, which is consistent with export theory (see equation A9 in Appendix A).…”

Section: Discussionmentioning

confidence: 99%

Saudi Non-oil Exports Before and After COVID-19: Historical Impacts of Determinants and Scenario Analysis.

Hasanov¹,

Joutz²,

Javid³

2021

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The diversification of the non-oil sector, including its exports, is at the core of Saudi Vision 2030. This study investigates Saudi non-oil exports in a novel way. Specifically, it differs from previous studies on this topic owing to its modeling framework. This study’s modeling framework first estimates the non-oil export equation, which allows us to examine the historical impacts of theoretically articulated demand- and supply-side determinants on non-oil exports. This is done using Autometrics, a state-of-the-art algorithm for computer-automated model selection in the general-to-specific modeling strategy framework, with super saturation.

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Real exchange rates and competitiveness

Cited by 44 publications

References 4 publications

Saudi Non-Oil Exports before and after COVID-19: Historical Impacts of Determinants and Scenario Analysis

Saudi Non-Oil Exports before and after COVID-19: Historical Impacts of Determinants and Scenario Analysis

Current Account Balances and Structural Adjustment in the Euro Area

Saudi Non-oil Exports Before and After COVID-19: Historical Impacts of Determinants and Scenario Analysis.

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