THE IMPACT OF THE COLLAPSE OF OIL PRICES ON ECONOMIC DEVELOPMENT IN SAUDI ARABIA

This paper examines the impact of oil price shocks on economic development growth in Saudi Arabia, which is dominant producer within OPEC & non-opec countries. The study revealed the causes of the oil prices fall and its impact on economic performance during the period 1986-2015.within the huge quantity oil reserve in Saudi Arabia and USA oil started to produce & export shale oil even it depend for Saudi oil at the same time, so this cheapest offer can be preferable to USA, China, Japan and others, plus use political pressures on Iran and Russia. This study investigates the timeline for the shocks caused by the fluctuations in the international price of oil, The study used a VAR Pairwise Granger causality test and impulse response functions (IRF) based on a vector auto regression model (VAR) to analyze the behavior of the fluctuations in the international price of oil. The oil prices–output relationship in KSA appears more significant when asymmetric specifications are used to model the relationship between variables. The study concludes by proposing several appropriate economic alternatives, like reduce the cost of transport and lead to lower costs for business, which can increase profitability, reduce inflation, boost economic growth and intends to diversify its sources of income, extensive effort has focused on the development of the non-oil export and provides recommendations for achieving the Kingdom's vision for 2030 which constitutes a roadmap for future development and economic objectives.