Experiment results indicate that cooled EGR provides more brake thermal efficiency improvement than increasing geometric CR from 9.3 to 10.9. The benefit of brake thermal efficiency from the higher CR is limited to low load conditions. The attributes for improving brake thermal efficiency by cooled EGR include reduced heat transfer loss, reduced pumping work and increased ratio of specific heats for all the engine operating conditions, as well as higher degree of constant volume heat release only for the knock-limited high load conditions. The combined effects of 18-25% cooled EGR and 10.9 CR lead to 2.1-3.5% improvements in the brake thermal efficiency (6-9% improvements in the fuel economy) compared to the baseline (9.3 CR without EGR). Among several effects contributing to the fuel economy improvement, the theoretical thermal efficiency improvement is primary which is caused by increased ratio of specific heats and increased geometric CR. The reduction in heat transfer loss due to lower combustion temperature with EGR is the secondary effect.