Hardheaded & Softhearted
: An optimal oil depletion policy for economic sustainability in Saudi Arabia

  • Abdulrahman A. Alkhalaf

    Student thesis: Doctoral ThesisDoctor of Philosophy


    The literature focusing on the resource-curse commonly characterize oil-rich economies as weak and fragile. These literatures encourage diversification ‘away’ from oil in order to develop the economies, however, they often overlook the path for development.

    In contrast to this broad aim, this research bids to develop the economy ‘based on’ oil using Saudi Arabia as case study that can be valuable to similar resource-rich economies. The research seeks to understand how public policymaking can be used as a path to sustainable economy. It employs concepts of economic theory to design an optimal oil depletion policy framework that normatively geared towards achieving sustainable economic outcome. Sustainable economy is that simply beyond what often gauged by the GDP, an economy that is focused on long-term value creation that can shield the country against market upsets.

    The policy framework is grounded on economic sustainability, political economy, and the role of institutions and policymaking in managing resource-rich economies. As a result, the methodology under Normative Policy Analysis Framework was devised to outline the oil depletion policy model which will also be practically useful to propose, develop, and analyze other normative policies. The methodology also helped in identifying the specific parameters influencing the oil depletion policy in Saudi Arabia and conceivably in other oil-rich economies.

    As the sustainable economic welfare is, by definition, at the heart of policymaking, government intervention through effective policymaking and strong institutions plays an active role in managing market distortions, promote socioeconomic welfare, and achieve sustainability. Saudi Arabia should employ the optimal oil depletion policy to steer the economy through the sustainable path by leveraging on its national comparative advantage underpinned by resource endowment.

    The research also revealed that, Saudi Arabia should optimally balance between endogenous and exogenous variables in crafting its oil policy. This should lead the path to economic diversification and enable the country to wean itself from oil-dependence, disengage from in rent-seeking activities, and shift to long-term sustainable development objectives implied by development-led depletion model.
    Date of Award2018
    Original languageEnglish
    SupervisorEric Bergmann (Supervisor) & Xiaoyi Mu (Supervisor)


    • Depletion policy
    • Oil policy
    • Political economy
    • Economic diversification
    • Natural resources
    • Resource-rich countries
    • Economic sustainability
    • Sustainable development

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