Data analysis of Saudi Arabia foreign trade sector shows that the major five trade partners during the last thirty years (1968-1997) are United States, Japan, France, Italy, and England. This stdy has two main objectives. First, to show the economic performance of Saudi trade with each major trade partner. Second, to develop a simultaneous equations model that takes into account the interaction between the Saudi economy and the top two trade partners, i.e., United States and Japan. The empirical results are consistent with prior expectations and support the mutual causation hypothesis that the demand for Saudi imports and exports are jointly dependent and each stimulates the other. It also shows the degree of interdependence between Saudi Arabia and the economies of United States and Japan. Generally, the results are significant and in several respects provide advances over those roughly comparable simultaneous systems.
Keywords: Saudi Arabia, Simultaneous Equations, Foreign Trade, Imports, Exports, Mutual Relationships, Demand.