Revealed Comparative Advantage of Saudi’s Exports

Abstract

Saudi Arabia is an oil based economy, getting about 40% of its GDP and around 90% of its export earnings from oil and gases. This paper aims at identifying the products in which country has comparative advantage using Balassa’s method of revealed comparative advantage, and to examine their long run and short run relationship with export price and world income. The paper found that Saudi Arabia has comparative advantage in exporting mineral fuels, oil, distillation products; non-mineral products like organic chemicals; fertilizers; and plastic and articles threof. The study further finds that mineral fuels, oil, distillation products and plastic and articles threof have significant relationship with world income and export price. Organic chemicals is found to be significantly related to world income but not to export price.

Key Words: Export, comparative advantage, bound test