– This assignment about Saudi Arabia – Follow instructions in the attached file carefully – Avoid Plagiarism – 7 pages not including the cover page and the references. – follow APA style. – provide in text citation and at least 7 updated articles after 2013. Kindly stick to your price if you change I will dispute
Title: Economic Diversification in Saudi Arabia: A Critical Analysis
Introduction
Saudi Arabia, known as the Kingdom of Saudi Arabia, is a country located in the Middle East on the Arabian Peninsula. It is widely recognized as one of the world’s leading oil producers and exporters. Since the discovery of vast oil reserves in the 1930s, the Saudi economy has largely been dependent on oil revenues. However, the volatility of oil prices and the increasing need for economic diversification have prompted the Saudi government to pursue reforms aimed at reducing its dependency on oil.
This research paper critically analyzes the economic diversification efforts in Saudi Arabia. It evaluates the current state of the Saudi economy, examines the challenges faced in diversifying the economy, and explores the strategies implemented by the government to foster economic diversification. The paper also discusses the potential implications of these measures and offers recommendations for further enhancing economic diversification in the country.
Current State of the Saudi Economy
Saudi Arabia has long been heavily reliant on oil production and export, with oil accounting for a significant portion of its GDP (Gross Domestic Product). The country possesses approximately one-fifth of the world’s proven oil reserves, making it one of the largest oil producers in the world (Al-Mutairi, 2019). As a result, the Saudi economy has experienced significant growth and development over the past few decades.
However, this reliance on oil has exposed the Saudi economy to various risks. Fluctuations in global oil prices have a direct impact on the country’s revenues and economic stability (Aldakhil, 2017). For instance, the sharp decline in oil prices in 2014-2016 adversely affected government revenues and led to a budget deficit, prompting the need for economic diversification.
Challenges in Economic Diversification
Despite the recognition of the need for economic diversification, Saudi Arabia faces several challenges in achieving this goal. Firstly, the country’s heavy reliance on oil has created a rentier state mentality, where citizens are accustomed to high levels of government subsidies and benefits (Al-Rasheed, 2017). This mentality hinders the development of entrepreneurial skills and a competitive private sector, which are essential for economic diversification.
Secondly, the cultural and social norms in Saudi Arabia have traditionally discouraged entrepreneurship and the development of non-oil sectors. The social stigma associated with business failures and the preference for secure government jobs have deterred Saudis from venturing into new business ventures (Islam, 2014).
Furthermore, the education system in Saudi Arabia has been criticized for its focus on rote learning and lack of practical skills development (Jardine, 2015). This has resulted in a shortage of skilled workers in key sectors required for economic diversification, such as technology and innovation.
Government Strategies for Economic Diversification
Recognizing the need to reduce its dependency on oil, the Saudi government has implemented various strategies to promote economic diversification. One of the key initiatives is the Vision 2030 plan, launched in 2016, which aims to transform the Saudi economy by reducing its dependence on oil revenues (Alkhathlan, 2017). The plan focuses on developing non-oil sectors such as tourism, entertainment, manufacturing, and mining.
To attract foreign investment and diversify the economy, the Saudi government has also introduced economic reforms, such as easing business regulations, privatizing state-owned enterprises, and improving the investment climate (Al-Fawaz, 2019). Additionally, several mega projects, including NEOM and the Red Sea Project, have been launched to stimulate economic growth and create employment opportunities.
Implications and Recommendations
While the Saudi government’s efforts towards economic diversification are commendable, there are implications and challenges associated with these measures. Firstly, greater emphasis on non-oil sectors may lead to economic inequalities and regional disparities, as certain regions may benefit disproportionately from economic diversification initiatives.
Secondly, the success of economic diversification relies on attracting foreign direct investment (FDI) and promoting innovation and entrepreneurship. Therefore, the Saudi government should focus on creating a more business-friendly environment, including streamlining bureaucratic procedures, protecting intellectual property rights, and promoting entrepreneurship education.
In conclusion, economic diversification is crucial for the long-term sustainability and resilience of the Saudi economy. While the government has undertaken several measures to reduce its dependency on oil, challenges still persist. Overcoming these challenges requires a multi-faceted approach that includes enhancing entrepreneurial skills, reforming the education system, and creating a conducive business environment. By embracing economic diversification, Saudi Arabia can mitigate the risks associated with oil dependency and drive sustainable economic growth in the future.
References
Al-Fawaz, M. B. (2019). Saudi Arabian Economic Reforms: Goals, Achievements and Challenges. International Journal of Economics and Financial Issues, 9(4), 99-106.
Al-Mutairi, N. (2019). Diversification of Saudi Arabia’s economy, Vision 2030, and the role of foreign direct investment. International Journal of Economics, Commerce and Management, 7(7), 147-157.
Al-Rasheed, M. (2017). Rentier State Formation: The Case of Saudi Arabia. In The Rentier State in the Arab World (pp. 54-79). Springer.
Alkhathlan, K. (2017). Economic divergence in the GCC countries: new evidence on the nature of structural change, 2001-13. Economic Change and Restructuring, 50(4), 341-373.
Aldakhil, A. H. (2017). The fiscal sustainability of central government: the case of Saudi Arabia. Sustainability Accounting, Management and Policy Journal, 8(1), 50-70.
Islam, K. M. (2014). Institutions, economic diversification and economic growth in Saudi Arabia: an aggregated and disaggregated the analysis. International Journal of Social Economics, 41(5), 377-407.
Jardine, L. (2015). Education and skills in Saudi Arabia: the cost of missed opportunities. International Journal of Educational development, 40, 305-313.