Structural Change Aiming at Sustainable Growth and Resilience in an Input-Output Model : A Case Study of Saudi Arabia

While sudden shocks are easily noticed, there are also less staggering changes that spread over decades but have fundamental economic impacts. We focus on modeling such a long-term and wide-ranging structural change envisaged for the Saudi economy in an innovative way. We apply the input-output framework to understand the sectoral and macroeconomic adjustments, considering key transformation targets and the diversification focal sectors. The overall advances in economic diversification are measured by the Shannon-Weaver index, which improves considerably in light of the sectoral adjustment. The shifts have profound consequences for the composition of economic activity, with a positive effect on economic resilience. The overall impact of an external shock is reduced by more than a third as a result of economic diversification and structural change. Overall, we present a suitable approach to assess and measure the transformation of a resource-rich economy into a more advanced, diversified, and resilient one