The Economic Diversification in Saudi Arabia Under the Strategic Vision 2030 (original) (raw)

The pillars of economic diversification in Saudi Arabia

World Review of Science, Technology and Sustainable Development, 2018

The success of economic diversification constitutes a key factor for sustainable economic growth. Therefore, a country that its economy only based on income from natural resources is in danger of instability. In addition, this diversification creates jobs, reduces poverty and improves the life and institution's qualities. After the first boom in 1970, the Saudi Arabia government has established 11 development plans, each one covering five years and their main objective is how to build a diversified economy. Accordingly, this paper aims to analyse the strategies of economic diversification in Saudi Arabia based on four variables: investment in education, entrepreneurship, international tourism and oil production over the period 1970-2014. Using the FMOLS technique, we found that oil production has the highest contribution to economic growth in Saudi Arabia, followed by the tourism sector and entrepreneurship activity, while, the contribution of education is positive, but insignificant. Research and policy recommendations are also discussed.

Economic Diversification Trends in the Gulf: the Case of Saudi Arabia

Circular Economy and Sustainability, 2021

A national economy which is dependent on income from just one source is vulnerable, especially when that income comes from non-renewable resources. The sustainable prosperity of an economy thus relies on the successful implementation of economic diversification. Diversification is key to creating an attractive, flourishing environment in a country and improving the quality of its institutions and its citizens' lives. The countries of the Gulf Cooperation Council (GCC) are accelerating their efforts to achieve economic diversification, with their national visions reflecting a shared aim of securing permanent high standards of living for future generations. After the first boom in oil prices in 1970, Saudi Arabia's government introduced primary development plans to diversify its economy. In 2016, it announced its 2030 vision to establish sustainable growth through economic diversification. The economic diversification strategy of Saudi Arabia is founded on several pillars, including investment in human capital and education and investment in non-oil sectors such as tourism. This paper aims to analyze the economic diversification trends in the GCC region with a special focus on Saudi Arabia as a case study. Within this wider context, the paper will concentrate on Saudi Arabia's efforts to achieve diversification by building a knowledge-based economy. Focusing on the quality of education and research improves the human capital available in the country which contributes to the growth of the economy. Results reveal that although Saudi Arabia has embarked on its diversification plans, the current status of oil prices, the deficit in the Saudi general budget, and the country's traditional educational system will hinder and slow this process.

On the investigation of economic diversification at disaggregated level in Saudi Arabia: An empirical study

The main objective of this study is to empirically examine the patterns of economic diversification in case of Saudi economy. Using annual data of oil and non-oil sectors for the sample period 1970-2011, the empirical results suggest that there are visible patterns of economic diversification at disaggregated (sectoral level). Sectors like community, finance, retail and transport appear to be relatively less synchronized with oil sector compared to agriculture, manufacturing and construction which exhibit high degree of synchronization. Further, the study attempts to explain sectoral synchronicity using determinants like public spending and volatile oil price. The results indicate that non-oil primary balance along with changes in oil price significantly explain sectoral synchronicity for some sectors, while, fiscal impulse along with changes in oil price does not significantly explain the sectoral synchronicity. The study has strong policy implications for Saudi economy and GCC countries as the outcome of this study is expected to provide important direction for policy makers to undertake necessary measures of economic diversification.

Economic Diversification: The Case of Kuwait with Reference to Oil Producing Countries

2008

The paper addresses the issue of economic diversification as a necessary, but not sufficient condition to enhance economic development process in the state of Kuwait, and oil exporting countries alike. A number of diversification indices are calculated, and an InputOutput based diversity index is provided. The latter measured with reference to the Norwegian economy as a benchmark for a welldiversified oil producing country. Moreover, an econometric model is estimated based on pooled analysis. This is important to draw some conclusions on the main determinants of diversification in the group of a selected oil producing countries: Indonesia, Iran, Kuwait, Oman, and Venezuela. Investment, and other few variables, is turn to be one of the most important determinants. The paper concludes by a set of policy

Economic diversification in GCC countries: past record and future trends

RePEc: Research Papers in Economics, 2013

Employing an empirical and comparative approach, this research paper analyses the past record and future trends of economic diversification efforts in the six Gulf Cooperation Council (GCC) countries. Applying the methodology of content analysis, possible future diversification trends are studied from current development plans and national visions published by the GCC governments. The past record of diversification has yielded only meagre results. Current development plans point unanimously to diversification as the means to secure the stability and the sustainability of income levels in the future. Even though the states continue to lead the economies, diversification entails a reinvigoration of the private sector and as such necessitates the implementation of broader reforms. The paper, however, questions the likelihood of diversification plans being translated into action. There are a number of structural barriers to diversification, which relate to the growth scenarios for the world economy, the duplication of economic activities among the GCC states, and, not least, the sizable barriers to interregional trade. Furthermore, the policy response to preempt the Arab Spring uprising indicates that these regimes easily give up their well-argued and planned policies when under pressure and fall back on established ways of doing business, namely through patronage and the predominant role of the public sector. Hence, the prospect of diversifying economies through politically difficult economic reforms has suffered a significant setback. This conclusion, however, does not rule out a piecemeal and ad hoc implementation of the diversification strategies in the future.

Economic Diversification in Bahrain

Applied Economics and Finance

Countries, such as the GCC countries, that predominantly rely for their income on oil resources face the reality that these sources of their income would not last forever. Thus, being a member of the GCC countries, Bahrain has been pursuing the policies of sustainable and diversified economic growth. This paper uses the share of nonoil real GDP to total real GDP as a measure of diversification to access the extent of diversification in Bahrain. The shares of nonoil GDP increased from 64% in the beginning of this of this century to 80% in 2016 with an average annual growth rate of 6.2% for the period 2002-2016. This success story seems to have an inherent problem. A bivariate structural VAR model with nonoil real GDP and oil price shows that oil prices (indirectly oil sector) have positive impact on the movements of the nonoil real GDP. This means nonoil sector has been very much dependent on the oil sector and neutralizing the dependence is required for the post oil era.

Private Sector Development and Economic Diversification in the GCC Countries: The Case of Kuwait

The positive correlation between economic transformation, export diversification, economic growth and job creation has been widely evidenced in the literature. The aim of this country-focused paper is to undertake a detailed assessment of the economic transformation in Kuwait over the past two decades and to formulate policy actions to foster the diversification performance of its economy. The assessment has been carried out using three different but complementary approaches: changes in sectoral composition of the GDP, estimation of diversification indices and building product space maps. The analysis has been carried out both for Kuwait and a panel of comparator countries to assess performance gaps and indentify factors of success and failure. The findings clearly show that Kuwait has not achieved any significant progress in reducing its dependency on oil revenues and diversifying its productive capacities and export basket. Consequently, the economy is becoming more vulnerable to ...

Private Sector Development and Economic Diversification in the GCC Countries: the Case of Qatar

The positive correlation between economic transformation and economic growth and job creation has been widely evidenced in the literature. The main objective of this country paper is provide a detailed assessment of the changes in the level of economic diversification of the Qatari economy over the past two decades. The assessment has been carried out using three different but complementary approaches: changes in sectoral composition of the GDP, estimation of diversification indices and building product space maps. This analysis has also been applied to Qatar and a panel of comparator countries to assess performance gaps and indentify factors of success and failure. The results show that compared to Kuwait, Qatar has been able to make greater progress in terms of economic transformation and export diversification. However, Qatar’s performance has been modest compared to that of the UAE. Many reasons explain this nominal performance. The most important among them is the prevalence of...

Economic Diversification in the Arab Gulf States

One of the major issues before the oil-rich Arab Gulf States in recent decades has been the diversification of their economies from the oil to non-oil sectors. Their heavy dependence (from 70 to 90%) on the oil revenues has prompted these countries to formulate the policies so that other sources of income from the non-oil sector can be enhanced. But the question is how for these Gulf States have been successful in implementing these policies? Moreover, what are the major drawbacks in the diversification their economies in the present time? In this paper, an attempt has been made to understand the rationale behind the diversification of Arab Gulf economies dominated any single rent revenues. This has been discussed in the framework of their overall macro-economic development, taking into consideration the various factors of productions, so that a desired balanced growth can be maintained. The main focus of the paper is on the current initiatives taken these States towards the building of a non-oil economy. While highlighting the Arab Gulf State‘s economic diversification drive, the paper particularly point out the varying degrees of seriousness and success because as this paper concludes, this economic diversification project could be conceived without taking into account the impact of fluctuation in oil prices in the global market as well as on the overall economic and political stability in the region