Saudi Arabia
The Economy of Saudi Arabia
Saudi Arabia
Saudi Arabia has a per capita income of $20,700 and it is one of the fastest growing economies in the world. Saudi Arabia’s economy is based on Petroleum, as 24 per cent of the globe’s petroleum, the equivalent of 260 billion barrels, is found here. 45 per cent of the Saudi Arabia’s Gross Domestic Product and 90 per cent of the export earnings come from the oil industry. 40 per cent of the GDP comes from the private sector, which the Arabian government tried to develop by privatizing industries like telecom or power.
As the oil price grew furiously in the last years, Saudi Arabia gained a budget surplus of $28 billion. It has the biggest stock market in the Middle East, with market capitalization being up 110 per cent ( $157.3 billion) in 2007.
The Saudi Arabian General Investment Authority has been established in April 2000 in order to promote foreign investment in Saudi Arabia. Its government opened some of the closed sectors like insurance, telecommunications and power distribution. In December 2005, after years of negotiation, Saudi Arabia joined the WTO (World Trading Organization) in order to diversify the economy and attract foreign investment. The negotiations dealt with the way in which Saudi Arabia was willing to change as far as market access to foreign services and goods is concerned.
The government tried to transform its oil-based economy into that of an industrial state through five year development plans. The first two of these plans emphasized infrastructure in the 1970s. As a result, power generation increased, the length of paved highways tripled and seaports grew in capacity. The third plan, from 1980 to 1986, emphasis was on social services, education and health; the fourth plan (1985-1990) encouraged foreign investment and private enterprise; the fifth ( 1990-1995) improved government social services and regional development; the sixth plan (1996-2000) aimed at lowering of government services cost and at expanding programs of educational training. The last plan (2000-2004) sought economic variation.
In Saudi Arabia there are still great differences between the rich and the poor. Traditional incomes come from fishing and agriculture. Agriculture activity is quite low, as only one per cent of Saudi Arabia’s surface is fertile. As far as export is concerned, Saudi Arabia has a surplus bigger than 100 per cent. Saudi Arabia’s most important partners of trade are the United States of America, Germany, Japan, the Netherlands, South Korea, France and Singapore. Most of the imports consist of foodstuffs, mechanical equipment (40%), chemicals and tobacco.
About the Author
I have studied economics for years and love to write about economic trends and conditions. I write for www.economywatch.com and www.economypedia.com.
Saudi Arabia
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