Ushering in the Post-Oil Era: A Functional Finance Approach to Development, Diversification and Sustainability in Saudi Arabia
The purpose of this dissertation is to analyze the social, economic and financial structures and the growth potential of Saudi Arabia as a fixed exchange rate country. Saudi Arabia has had its currency pegged to the US dollar since 1986. From a traditional MMT perspective, the country can thus not be defined as monetarily sovereign. Monetarily non-sovereign countries fall on a continuum of sovereignty in accordance with their ability to meet their exchange rate requirements and maintain their peg. In this dissertation, I conduct an inquiry, using the example of Saudi Arabia, of how the framework of Functional Finance, and particularly the use of fiscal policy, can be adapted for non-sovereign countries. Saudi Arabia has been an export-driven economy for many decades and has been largely dependent on its oil sales proceeds. However, with volatility in oil prices and the need to find sustainable energy practices, it has started to diversify its economy and develop other sectors. As the country is not monetarily sovereign and its private sector is still developing, its export revenues have served it well so far. The government has been able to build a substantial stock of foreign exchange reserves that can be used to defend its exchange rate peg and achieve policy goals. Through the dissertation, I study the current framework of the country and review its main challenges and strategies with regards to oil dependence, diversification, employment and revenue streams. All development policies discussed herein are grounded in Modern Money Theory and are aimed to be sustainable, functional and customized to the specific case of Saudi Arabia.
Networked Digital Library of Theses and Dissertations