Economy Of Saudi Arabia

The economy of Saudi Arabia has long been predominantly dependent on its petroleum sector, which constitutes a critical pillar of the nation’s financial structure. Oil contributes approximately 30% of the country’s Gross Domestic Product (GDP), highlighting its central role in economic output. Moreover, petroleum accounts for about 55% of government revenue, a figure that underscores the fiscal reliance of the Saudi state on hydrocarbon exports. This dependence, however, subjects government income to significant annual fluctuations, as oil prices are highly volatile and influenced by global market dynamics, geopolitical developments, and production decisions by major oil-exporting countries. Consequently, the kingdom’s fiscal health and budgetary planning have historically been closely tied to the ebb and flow of international oil prices, making economic diversification a persistent challenge. Saudi Arabia’s hydrocarbon wealth is underscored by its possession of the second-largest proven petroleum reserves in the world, a testament to the vastness of its oil fields and the longevity of its resource base. In addition to crude oil, the kingdom holds the fourth-largest measured natural gas reserves globally, which further enhances its stature as a major energy producer. These extensive reserves have provided Saudi Arabia with a strategic advantage in the global energy market, enabling it to maintain a dominant position in oil production and exportation for decades. The sheer scale of these resources has also allowed the kingdom to exert considerable influence over global energy supply and pricing, reinforcing its role as a key player in international energy geopolitics. Saudi Arabia is recognized as the largest exporter of petroleum worldwide, a status that highlights its critical role in meeting global energy demand. The kingdom’s oil exports have consistently ranked at the top globally, supplying a significant portion of the world’s crude oil consumption. This dominant export position has been facilitated by the vast infrastructure developed to extract, process, and transport petroleum, including some of the world’s largest oil fields such as Ghawar and Safaniya. The country’s export capacity has enabled it to serve as a reliable supplier to a diverse range of international markets, including Asia, Europe, and the Americas, thereby reinforcing its strategic economic importance on a global scale. Beyond the extraction of crude oil, Saudi Arabia’s economy encompasses a range of key activities related to refining and chemical manufacturing, which are largely derived from its oil reserves. These downstream sectors play a vital role in adding value to the kingdom’s hydrocarbon resources by converting crude oil into refined petroleum products, petrochemicals, and other chemical derivatives. Much of this industrial activity is vertically integrated within the state-owned enterprise Saudi Aramco, which operates not only as an oil producer but also as a major player in refining and petrochemical production. Saudi Aramco’s integrated operations enable the kingdom to capture a greater share of the value chain associated with hydrocarbons, supporting domestic industrial development and export diversification within the energy sector. Saudi Arabia’s influential position in global oil markets is further reflected in its status as both a permanent and founding member of the Organization of the Petroleum Exporting Countries (OPEC). Since its establishment in 1960, OPEC has served as a collective body for coordinating petroleum policies among member countries, aiming to stabilize oil markets and secure fair revenues for oil producers. Saudi Arabia’s involvement as a founding member underscores its early recognition of the importance of multilateral cooperation in managing oil production and prices. Over the decades, the kingdom has played a leading role within OPEC, often acting as the swing producer capable of adjusting output to influence global oil supply and stabilize markets. This leadership role has enhanced Saudi Arabia’s ability to shape global oil policy and maintain its position as a dominant force in the petroleum industry. In an effort to address the vulnerabilities associated with heavy reliance on oil revenues, the Saudi government launched the Saudi Vision 2030 program in 2016. This ambitious strategic framework was designed to reduce the nation’s economic dependence on oil by diversifying its economic base across various sectors, including industry, tourism, entertainment, and technology. Vision 2030 aims to foster private sector growth, develop non-oil industries, and promote sustainable development through investment in infrastructure, education, and innovation. The program also seeks to enhance the efficiency of government spending and create new employment opportunities for Saudi citizens, thereby transforming the kingdom’s economic landscape and reducing its susceptibility to oil price shocks. Despite the comprehensive efforts under Vision 2030, by the year 2022, Saudi Arabia had achieved only modest reductions in its dependence on oil revenues. While progress was evident in the expansion of non-oil sectors and increased investment in diversification projects, the petroleum sector continued to dominate the economy and government finances. The persistence of oil as the primary source of revenue reflects both the scale of the kingdom’s hydrocarbon resources and the challenges inherent in rapidly transforming a resource-dependent economy. Nonetheless, the ongoing implementation of Vision 2030 initiatives indicates a sustained commitment to economic reform and diversification, with the expectation that longer-term structural changes will gradually reduce the kingdom’s reliance on oil. Saudi Arabia’s monetary policy framework is anchored by a fixed exchange rate system, with the Saudi Riyal pegged to the U.S. Dollar. This currency peg has provided a foundation of stability for the kingdom’s financial system by minimizing exchange rate volatility and fostering investor confidence. The fixed exchange rate arrangement facilitates trade and investment by providing predictable currency valuation, which is particularly important given Saudi Arabia’s extensive economic ties with the United States and global markets. This monetary policy approach has been maintained for several decades, reflecting the kingdom’s preference for stability in its external economic relations and its reliance on the U.S. Dollar as the dominant currency in international oil transactions. The structure of Saudi Arabia’s economy is characterized by extensive government involvement in the private sector, with nearly all major businesses maintaining significant connections to the Saudi state. This close relationship reflects the historical development of the kingdom’s economic model, in which the state has played a central role in directing economic activity, managing natural resources, and fostering industrial growth. Many large enterprises operate as state-owned or state-affiliated entities, or maintain partnerships and joint ventures with government institutions. This interconnectedness enables the government to influence key sectors, implement economic policies effectively, and coordinate large-scale development projects. However, it also presents challenges related to market competition and private sector autonomy, which the government has sought to address through reforms aimed at encouraging greater private sector participation and entrepreneurship.

Saudi Arabia holds the second largest proven oil reserves in the world, surpassed only by the combined reserves of Brazil and Venezuela. It ranks as the world’s leading oil exporter and the second-largest oil producer globally, underscoring its critical role in the international energy market. According to official Saudi government figures, the country’s proven oil reserves are estimated at approximately 260 billion barrels, equivalent to around 41 cubic kilometers. This figure represents roughly one-quarter of the world’s total proven oil reserves, highlighting the kingdom’s vast hydrocarbon wealth. The petroleum reserves in Saudi Arabia are not only abundant but also uniquely advantageous due to their geological characteristics; the oil fields are located under high pressure and relatively close to the earth’s surface. This natural condition significantly reduces extraction costs and enhances the profitability of oil production compared to other regions where reserves may be deeper or more technically challenging to exploit. The petroleum sector forms the backbone of the Saudi economy, contributing about 87% of the government’s budget revenues, 90% of the country’s export earnings, and approximately 42% of its Gross Domestic Product (GDP). This heavy reliance on oil revenues has shaped the economic structure and fiscal policies of the kingdom. The management and production of Saudi Arabia’s oil reserves are largely overseen by Saudi Aramco, a state-owned corporation that is recognized as one of the largest and most profitable oil companies in the world. Saudi Aramco’s operations encompass exploration, production, refining, and distribution, making it a central pillar in the kingdom’s economic framework. While the oil sector dominates, the private sector also plays a significant role in Saudi Arabia’s economy, accounting for an estimated 40% of the GDP. The private sector’s growth has been supported by a substantial expatriate workforce; as of 2013, around 7.5 million foreigners were legally employed in the kingdom. These foreign workers have been vital to the development of the Saudi economy, particularly in sectors such as oil, construction, and services. Recognizing the need to diversify the economy and reduce dependence on oil revenues, the Saudi government has actively promoted private sector expansion. This strategy aims to broaden employment opportunities for the rapidly growing Saudi population and to foster sustainable economic growth beyond hydrocarbons. In recent decades, the Saudi government has gradually liberalized certain areas of the economy by permitting private sector activities and encouraging foreign investment in specific sectors, including power generation and telecommunications. This shift has been part of broader economic reforms designed to modernize the economy and attract international capital. Saudi Arabia’s accession to the World Trade Organization (WTO) further integrated the kingdom into the global trading system, facilitating trade liberalization and economic diversification efforts. Throughout much of the 2000s, the kingdom benefited from high oil prices, which enabled the government to run budget surpluses. These surpluses were invested in various areas such as job training, education, infrastructure development, and increased government salaries, thereby strengthening the country’s human capital and physical infrastructure. The Saudi economy is characterized by its absolute monarchy and a large state sector that provides extensive welfare benefits. It has been described as a complex blend of a feudal fealty system and modern political patronage, where social and bureaucratic interactions are heavily influenced by personal privileges, favors, obligations, and connections. The government bureaucracy itself is noted for its overlapping and sometimes conflicting power centers, each under the patronage of various royal princes who maintain distinct priorities, agendas, and networks of dependents. This intricate political structure affects economic decision-making and policy implementation, contributing to the unique nature of Saudi Arabia’s economic governance. Economic indicators from 1980 through 2021, supplemented by International Monetary Fund (IMF) staff estimates for 2022 to 2027, reveal a dynamic economic trajectory marked by fluctuations in GDP, GDP per capita, inflation, unemployment, and government debt. Inflation rates under 5% are particularly highlighted, reflecting periods of relative price stability. In 1980, Saudi Arabia’s GDP measured on a purchasing power parity (PPP) basis was 418.1 billion international dollars (Int$), with a GDP per capita of 44,859.5 Int$. The nominal GDP stood at 164.5 billion US dollars, and nominal GDP per capita was 17,655.1 US dollars. That year, the economy experienced a real GDP growth rate of 5.7% alongside an inflation rate of 4.4%, indicating robust economic expansion with moderate price increases. However, the 1980s were marked by significant economic volatility, including pronounced GDP contractions. For instance, in 1982, the economy shrank by 20.7%, and in 1983, it contracted by 16.1%. Inflation rates during this decade fluctuated between negative figures, such as -3.1%, and positive rates up to 4.4%, reflecting the economic adjustments following oil price shocks and global economic conditions. From 1990 onward, Saudi Arabia’s GDP and GDP per capita generally exhibited upward trends, although real GDP growth rates varied considerably. The year 1990 saw a peak growth rate of 15.2%, largely driven by the Gulf War’s impact on oil prices and regional dynamics, while 1999 experienced a low of -3.8%, reflecting economic challenges and adjustments. Government debt as a percentage of GDP rose sharply during the 1990s, increasing from 39.4% in 1991 to a peak of 103.0% in 1999. This surge was attributable to budget deficits and increased public spending in response to fluctuating oil revenues and regional geopolitical events. Following this peak, government debt gradually declined, reaching 5.4% of GDP by 2011, as fiscal consolidation and improved oil revenues strengthened the kingdom’s financial position. Inflation rates during the 1990s and early 2000s remained mostly low or negative, with occasional spikes such as 5.1% in 1995 and 6.1% in 2008, reflecting both domestic economic conditions and external price shocks. Unemployment rates in Saudi Arabia have shown variability over the years. In 1999, the unemployment rate was recorded at 4.3%, but by 2020, it had increased to 7.4%, reflecting demographic pressures and labor market challenges. Despite these fluctuations, the Saudi economy experienced robust GDP growth during the 2000s. Notable growth rates included 11.2% in 2003, 10.0% in 2011, and an IMF-estimated 7.6% in 2022, underscoring periods of strong economic performance fueled by high oil prices and government investment. By 2014, the kingdom’s GDP (PPP) had expanded to 1,722.9 billion Int$, with a GDP per capita of 56,785.5 Int$. The nominal GDP reached 756.4 billion US dollars, and nominal GDP per capita was 24,929.3 US dollars. That year, real GDP growth was recorded at 3.7%, accompanied by a moderate inflation rate of 2.2%. The economy contracted in 2015 and 2016, with real GDP growth slowing to 4.1% and 1.7%, respectively, while inflation rates remained subdued at 1.2% and 2.1%. From 2017 to 2021, GDP growth rates fluctuated between -0.7% and 3.2%, with inflation generally hovering around 2 to 3%. During this period, government debt as a percentage of GDP varied between 5.4% and 30.0%, and unemployment rates ranged from approximately 5.5% to 6.7%, reflecting ongoing economic adjustments and diversification efforts. IMF staff projections for the period 2022 to 2027 forecast continued positive GDP growth, with GDP (PPP) expected to rise from 2,018.3 billion Int$ in 2022 to 2,629.4 billion Int$ by 2027. Correspondingly, GDP per capita is projected to increase from 55,802.3 Int$ to 65,847.1 Int$ over the same timeframe. Nominal GDP is anticipated to grow from 1,010.6 billion US dollars in 2022 to 1,116.1 billion US dollars in 2027, while nominal GDP per capita is expected to remain relatively stable, increasing slightly from 27,941.5 US dollars to 27,950.0 US dollars. Real GDP growth rates are forecasted to remain positive and steady, ranging between 2.9% and 3.0% annually from 2023 through 2027. Inflation rates are expected to stabilize around 2.0%, reflecting controlled price dynamics in the kingdom’s economy. Government debt as a percentage of GDP is projected to decline steadily from 24.8% in 2022 to 22.4% in 2027, indicating improved fiscal sustainability. However, unemployment data for these forecast years are not available, leaving some uncertainty regarding labor market trends in the near future.

On March 4, 1938, the discovery of oil in commercial quantities at Dammam No. 7 marked a pivotal moment in the economic history of Saudi Arabia. This well, located near the Persian Gulf coast, was the first in the kingdom to yield oil at a scale sufficient for commercial exploitation, effectively catalyzing the transformation of Saudi Arabia from a predominantly subsistence-based economy into one centered on oil production and exportation. Prior to this discovery, the Saudi economy relied heavily on agriculture, pilgrimage revenues, and limited trade, with minimal industrial development. The newfound oil wealth would soon become the cornerstone of the nation’s rapid modernization and economic growth. The foundation for this discovery was laid five years earlier, in 1933, when the Saudi government signed an oil concession agreement with the Standard Oil Company of California (SoCal). This agreement granted SoCal the rights to explore and develop oil resources within the kingdom, reflecting Saudi Arabia’s strategic move to attract foreign investment and expertise to unlock its natural resources. The partnership between Saudi Arabia and SoCal, which later evolved into the Arabian American Oil Company (Aramco), was instrumental in the exploration activities that culminated in the 1938 discovery. The agreement marked the beginning of a long-term collaboration that would shape the kingdom’s economic trajectory. The development and management of Saudi Arabia’s oil fields were primarily overseen by the Arabian American Oil Company, commonly known as Aramco. This entity was a joint venture involving major American oil companies, including Texaco and Chevron, which played critical roles in the exploration, extraction, and marketing of Saudi oil. Aramco’s expertise and capital investment facilitated the rapid expansion of oil production infrastructure, enabling Saudi Arabia to become one of the world’s leading oil producers. The company’s operations extended beyond onshore fields, pioneering offshore oil development in the region. In 1951, Aramco established the Middle East’s first offshore oil field at Raʾs Al-Saffāniyyah, located in the Persian Gulf. This development represented a significant technological and logistical achievement, as offshore drilling was still in its infancy globally. The successful exploitation of this offshore field expanded Saudi Arabia’s oil production capacity and demonstrated the kingdom’s commitment to diversifying its oil extraction techniques. This milestone also underscored Aramco’s role as a leader in the regional oil industry, setting a precedent for future offshore projects in the Gulf. By 1949, Saudi Arabia’s oil production had reached 500,000 barrels per day (bpd), a substantial increase from the early years of production. This growth continued at a rapid pace, with output doubling to 1 million bpd by 1954. The expansion of production capacity was driven by increased global demand for oil in the post-World War II era, as industrialized nations rebuilt their economies and transportation sectors. Saudi Arabia’s ability to scale production so quickly positioned it as a critical player in the global energy market and laid the groundwork for its future economic development. In the same year that it developed the offshore field, 1951, Aramco began operating the Trans-Arabian Pipeline, a major infrastructure project designed to transport crude oil from the eastern oil fields of Saudi Arabia to the Mediterranean Sea. The pipeline traversed Jordan, Syria, and Lebanon, providing a strategic outlet for Saudi oil exports to European and global markets. This pipeline significantly reduced transportation costs and transit times compared to shipping oil around the Arabian Peninsula, enhancing Saudi Arabia’s competitiveness in the international oil market. The Trans-Arabian Pipeline remained operational until 1981, when it was replaced by a new pipeline connecting Jubail on the Persian Gulf to Yanbu on the Red Sea. This new pipeline was constructed to circumvent geopolitical risks and logistical challenges associated with the original route through several countries. By linking the eastern oil fields directly to the Red Sea, the pipeline enabled faster and more secure shipment of oil to global markets, particularly to Europe and the Americas. The Jubail-Yanbu pipeline thus played a crucial role in accelerating Saudi Arabia’s oil export capacity and reducing vulnerability to regional conflicts. Saudi Arabia was a founding member of the Organization of the Petroleum Exporting Countries (OPEC), which was established in 1960. The formation of OPEC represented a collective effort by major oil-producing nations to coordinate petroleum policies, stabilize oil markets, and secure fair prices for producers. Saudi Arabia’s participation in OPEC underscored its emerging influence in the global oil industry and its commitment to shaping international energy policies. Over time, Saudi Arabia would become one of OPEC’s most influential members, often acting as a swing producer to balance global oil supply and demand. The 1973 oil crisis marked a watershed moment for Saudi Arabia and the global economy. During this period, oil prices surged dramatically from $3 to nearly $12 per barrel, largely due to the Arab oil embargo in response to Western support for Israel during the Yom Kippur War. This price increase had profound economic effects, causing Saudi Arabia’s gross domestic product (GDP) to expand from approximately $15 billion in 1973 to nearly $184 billion by 1981. The sudden influx of oil revenues enabled the Saudi government to undertake extensive infrastructure projects, social programs, and economic diversification efforts, fundamentally altering the kingdom’s economic landscape. Throughout the 1970s, the Saudi government gradually acquired the assets of Aramco, culminating in the full nationalization of the company in 1980. This process reflected a broader trend among oil-producing nations to assert greater control over their natural resources and revenues. The nationalization allowed Saudi Arabia to directly manage its oil production, pricing, and marketing strategies, thereby increasing its sovereignty over one of its most valuable economic assets. The transition also led to the establishment of Saudi Aramco as a state-owned enterprise responsible for the kingdom’s oil industry. In 1988, Saudi Aramco was formally established to assume the responsibilities previously held by the former Aramco company. This reorganization consolidated the kingdom’s oil operations under a single, fully state-owned entity, streamlining decision-making and operational control. Saudi Aramco rapidly expanded its capabilities in exploration, production, refining, and marketing, becoming one of the largest and most technologically advanced oil companies in the world. The company’s growth paralleled Saudi Arabia’s increasing role as a dominant force in the global energy sector. Oil prices reached a peak in 1980 at about $36 per barrel, driven by geopolitical tensions and supply disruptions. However, this peak was followed by a decline in demand due to recessions in industrialized countries and improvements in energy efficiency. These factors contributed to a global oil glut, as supply outpaced demand. The resulting oversupply led to significant price volatility and economic challenges for oil-exporting countries, including Saudi Arabia. By 1986, oil prices had fallen to approximately $14 per barrel, reflecting the sustained oversupply and weakened demand. In response to the market conditions, Saudi Arabia sharply reduced its oil production from nearly 10 million bpd in 1980–81 to about 2 million bpd in 1985, representing an 80% reduction. This drastic cutback aimed to stabilize prices by curbing excess supply, though it also had significant fiscal implications for the kingdom’s budget and economic planning. During this period of low oil prices and reduced production, the Saudi government faced budget deficits and was compelled to draw down its foreign assets to manage the economic impact. The depletion of reserves underscored the vulnerability of an oil-dependent economy to fluctuations in global energy markets. The government’s fiscal challenges prompted efforts to diversify the economy and improve financial management to mitigate future shocks. Beginning in 1985, Saudi Arabia enforced OPEC production quotas more strictly as part of a broader strategy to address the oil glut and declining production pressures. By adhering to agreed production limits, Saudi Arabia sought to support global oil prices and maintain the stability of the oil market. This policy also reinforced Saudi Arabia’s leadership role within OPEC, as its compliance was critical to the cartel’s effectiveness in managing supply. In June 1993, Saudi Aramco absorbed the state marketing and refining company SAMAREC, becoming the world’s largest fully integrated oil company. This merger consolidated upstream and downstream operations under one corporate structure, enhancing operational efficiency and market reach. The integration allowed Saudi Aramco to control the entire value chain from exploration and production to refining and marketing, strengthening its competitive position globally. The majority of Saudi oil exports are shipped via tankers from major oil terminals located at Ras Tanura and Ju’aymah on the Persian Gulf. These facilities are among the largest and most advanced oil export terminals in the world, equipped to handle vast volumes of crude oil destined for international markets. The strategic location of these terminals facilitates efficient maritime transport to Asia, Europe, and the Americas, underpinning Saudi Arabia’s status as a leading oil exporter. During the 1990s, Saudi Arabia experienced a significant contraction in oil revenues, largely due to persistently low oil prices and reduced production levels. This decline coincided with high population growth, which exerted pressure on the kingdom’s resources and public services. As a result, per capita income fell sharply from $11,700 in 1981 to $6,300 in 1998, reflecting the economic challenges faced by the population despite the country’s vast oil wealth. This period highlighted the vulnerabilities inherent in an economy heavily reliant on volatile oil markets. Adjusted for real oil price changes, Saudi Arabia’s real command-basis GDP was estimated at 330.381 billion 1999 U.S. dollars in 2010. This measure accounts for inflation and price fluctuations, providing a more accurate reflection of the kingdom’s economic output over time. The figure illustrates the substantial scale of Saudi Arabia’s economy despite the challenges of the preceding decades and underscores the importance of oil revenues in sustaining economic growth. Rising oil prices in the early 2000s contributed to an increase in Saudi Arabia’s per capita GDP, which reached $17,000 in 2007 dollars (approximately $7,400 when adjusted for inflation). This growth was fueled by heightened global demand for energy, particularly from emerging economies, and geopolitical factors that constrained supply. However, the per capita GDP declined following the mid-2014 oil price drop, demonstrating the continued sensitivity of the Saudi economy to fluctuations in global oil markets. Beginning in late 1997, Saudi Arabia faced a period of low oil prices caused by a combination of factors, including the East Asian economic crisis, a warm winter in the West attributed to the El Niño weather phenomenon, and increased oil production from non-OPEC countries. These elements collectively reduced global demand for oil and contributed to a price decline of over one-third. The downturn challenged Saudi Arabia’s fiscal stability and prompted adjustments in production policies. Saudi Arabia played a key role in the successful 1999 OPEC-led campaign to raise oil prices to their highest level since the Gulf War by managing petroleum supply and production. The kingdom’s cooperation in coordinating output cuts with other OPEC members helped tighten the market and restore price levels. This strategic management reinforced Saudi Arabia’s influence within OPEC and its ability to affect global oil market dynamics. In 1999, Saudi Arabia established the Supreme Economic Council to better coordinate economic development policies and accelerate institutional and industrial reforms. This body was tasked with overseeing the implementation of economic strategies aimed at diversifying the economy, improving governance, and fostering sustainable growth. The council’s creation reflected the government’s recognition of the need to reduce dependence on oil revenues and prepare the economy for future challenges. After prolonged negotiations, Saudi Arabia joined the World Trade Organization (WTO) in 2005. Membership in the WTO signaled the kingdom’s commitment to integrating into the global economic system and adhering to international trade rules. This accession facilitated greater access to global markets, encouraged foreign investment, and supported economic reforms aimed at enhancing competitiveness and diversification beyond the oil sector.

Prior to the year 2000, Saudi Arabia maintained stringent restrictions on foreign direct investment (FDI), which were primarily governed by the Foreign Investment Act enacted in 1979. This legislation imposed prohibitions on foreign ownership in certain key economic sectors deemed strategic or sensitive to national interests. Foreign investors were only permitted to engage in business activities if they qualified for a license, a process that required demonstrating specific expertise and capabilities relevant to the sector in question. Moreover, the regulatory framework prioritized enterprises that were either wholly Saudi-owned or had significant Saudi participation, reflecting a policy orientation aimed at preserving domestic control over the economy while cautiously allowing foreign participation under tightly controlled conditions. During the mid-1990s, these restrictive foreign ownership regulations began to be relaxed as part of a broader initiative to attract foreign capital and expertise into emerging sectors of the Saudi economy. The government actively sought to encourage investment particularly in telecommunications, utilities, and financial services—areas identified as crucial for modernization and diversification beyond the oil sector. This policy shift marked a gradual opening of the Saudi market to foreign investors, signaling a recognition of the need to integrate into the global economy and leverage international partnerships to foster economic growth and development. A landmark reform occurred in 2000 with the introduction of the Foreign Direct Investment Act, which significantly transformed the regulatory landscape for foreign investors in Saudi Arabia. For the first time, the legislation permitted projects to be wholly owned and operated by foreign companies, eliminating the previous requirement for Saudi partnership or partial ownership. This change was designed to enhance the attractiveness of the Saudi market by providing greater operational autonomy and control to foreign investors, thereby encouraging larger and more diverse investments across multiple sectors. The 2000 Act represented a pivotal moment in Saudi Arabia’s economic policy, aligning the kingdom more closely with international standards and signaling a commitment to fostering a more open investment climate. Despite these reforms, foreign direct investment inflows into Saudi Arabia experienced considerable fluctuations in the subsequent decades. According to a June 2018 report by the United Nations Conference on Trade and Development (UNCTAD), Saudi Arabia’s FDI amounted to only $1.4 billion in 2017, marking a sharp decline from $7.5 billion in 2016 and a peak of $12.2 billion in 2012. This downward trend highlighted challenges in sustaining foreign investor confidence and underscored the volatility of capital flows in the kingdom. The decline was largely attributed to negative intra-company loans extended by foreign multinational corporations, which effectively reduced net FDI figures, as well as various divestments by foreign entities withdrawing or scaling back their investments. The financial dynamics underlying these trends were further reflected in Saudi Arabia’s capital account movements. In the first quarter of 2018, the kingdom experienced net capital outflows equivalent to approximately 5% of its gross domestic product (GDP), a significant increase compared to less than 2% of GDP observed in late 2016. This shift indicated a period of financial adjustment and capital reallocation, possibly influenced by broader economic reforms, fluctuations in oil prices, and changing investor sentiment. However, this period of capital outflows was not uniformly indicative of declining foreign interest in Saudi Arabia. Contrarily, data reported by Trading Economics showed that foreign direct investment increased by $882 million in the second quarter of 2018, suggesting a rebound or renewed inflows of foreign capital during that timeframe. Supporting this nuanced picture of foreign investment activity, data from the Saudi Arabian General Investment Authority (SAGIA) revealed a remarkable 130% increase in licenses granted to foreign investors in the first quarter of 2018. This surge was largely attributed to a series of economic reforms implemented by the Saudi government aimed at improving the business environment, streamlining regulatory processes, and enhancing transparency. These reforms were part of a broader strategic vision to diversify the economy and reduce dependence on oil revenues by attracting foreign expertise, technology, and capital into various sectors. The late 2010s presented significant fiscal challenges for Saudi Arabia as declining oil revenues exerted pressure on government finances. In response, the kingdom’s international debt levels surged as it sought to finance budget deficits and maintain economic stability. In December 2018, Saudi Arabia announced plans to issue bonds worth approximately 120 billion riyals (equivalent to $32 billion) to cover a budget deficit amounting to 131 billion riyals, which represented 4.2% of GDP. This bond issuance was part of a broader strategy to mobilize external financing and manage fiscal shortfalls amid a changing global energy landscape and domestic economic reforms. Continuing its efforts to access international capital markets, Saudi Arabia sold bonds worth $7.5 billion in January 2019. This issuance contributed to a cumulative total of $60 billion raised through bonds over a period of nearly two and a half years, positioning Saudi Arabia as one of the largest borrowers globally during that timeframe. The kingdom’s active engagement in debt markets reflected a strategic shift towards leveraging external financing to support economic transformation initiatives and infrastructure development while navigating the challenges posed by fluctuating oil prices. In a notable development in September 2018, the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, secured an $11 billion loan from a consortium of global lenders. This loan exceeded initial expectations and marked the PIF’s first incorporation of loans and debt instruments into its funding strategy. Traditionally reliant on government allocations and investment returns, the PIF’s move to include debt financing represented a new approach to capital mobilization, aimed at accelerating the fund’s investment activities both domestically and internationally as part of the kingdom’s Vision 2030 economic diversification plan. Data from Fitch Ratings highlighted the rapid pace of Saudi Arabia’s debt accumulation over a two-year period beginning in May 2016. During this time, the kingdom transitioned from having virtually no external debt to raising approximately $68 billion through dollar-denominated bonds and syndicated loans. This swift buildup of debt was among the fastest recorded for emerging economies, reflecting the urgency with which Saudi Arabia sought to finance its fiscal deficits and economic reforms. The scale and speed of this debt issuance underscored the kingdom’s evolving financial strategy and its integration into global capital markets. Foreign investment activity demonstrated renewed vigor in the first quarter of 2019, with the number of new licenses approved for foreign businesses increasing by 70% compared to the same period in 2018. This substantial growth was indicative of improved investor confidence and the positive impact of ongoing regulatory reforms designed to facilitate foreign business operations. The surge in foreign business licenses was primarily driven by companies from the United Kingdom and China, reflecting the kingdom’s expanding international economic partnerships and the diversification of its foreign investor base. Correspondingly, foreign direct investment in Saudi Arabia rose by 28% in the first quarter of 2019 relative to the previous year. This increase aligned with the broader trend of enhanced foreign engagement in the Saudi economy, supported by government initiatives to create a more conducive investment climate. The growth in FDI during this period signaled a gradual but meaningful shift towards greater integration of foreign capital and expertise into the kingdom’s economic framework, consistent with its long-term objectives of diversification and sustainable development.

Since 1970, Saudi Arabia’s government has consistently incorporated economic diversification as a central goal in all its five-year development plans, aiming to reduce the kingdom’s heavy reliance on oil revenues. Despite these sustained efforts, the diversification initiatives have yielded only marginal success, with the economy remaining predominantly dependent on petroleum exports. The government’s strategy involved channeling petroleum income into transforming the oil-based economy into a modern industrial state, while simultaneously preserving the traditional Islamic values and customs that underpin Saudi society. This dual objective sought to balance modernization and economic growth with cultural continuity, reflecting the kingdom’s unique socio-political context. Although not all economic objectives outlined in the development plans were fully realized, Saudi Arabia experienced rapid economic progress, largely fueled by its vast oil wealth. This influx of petroleum revenue significantly elevated the standard of living for the majority of Saudi citizens, enabling improvements in infrastructure, healthcare, education, and social services. However, the kingdom’s rapid population growth placed increasing pressure on the government’s capacity to finance further enhancements in living standards and public services. This demographic expansion necessitated greater public expenditure and complicated efforts to diversify the economy and create sufficient employment opportunities for the growing workforce. Despite ongoing diversification endeavors, Saudi Arabia’s economy remained heavily dependent on petroleum revenue well into the early 21st century. Nonetheless, the relative contributions of industry and agriculture to the overall economic activity increased, reflecting gradual structural changes. A critical impediment to diversification has been the mismatch between the skills acquired by Saudi graduates and the labor market demands of the private sector. This skills gap has contributed to the continued dominance of foreign labor in many sectors; as of recent estimates, approximately 4.6 million non-Saudis were employed within the Saudi economy, underscoring the challenges in achieving full Saudization of the workforce. The kingdom’s economic diversification efforts formally began in the 1970s with the launch of its first five-year development plan. This initial plan focused on establishing basic petrochemical industries that utilized petroleum byproducts, marking a strategic shift toward value-added industrial production. The government invested heavily in developing industrial infrastructure, including the establishment of two major industrial cities: al-Jubail on the Persian Gulf and Yanbu on the Red Sea. These cities were designed to become hubs for petrochemical processing and heavy industry, although their overall impact on the national economy remained limited relative to the dominant oil sector. During the 1970s, the first two development plans prioritized the expansion of infrastructure to support industrialization and economic growth. These plans resulted in a tripling of the length of paved highways, a 28-fold increase in power generation capacity, and a tenfold expansion of seaport capacity. These monumental infrastructure improvements laid the groundwork for subsequent industrial development and facilitated greater connectivity within the kingdom. The third development plan, covering the period from 1980 to 1985, marked a shift in focus from infrastructure expansion to social sectors such as education, health, and social services. Despite this reorientation, the plan’s goals for diversification and expansion of productive sectors did not materialize as anticipated, with the economy remaining heavily oil-dependent. The industrial cities of Jubail and Yanbu reached substantial completion during the third plan, becoming centers for the production of steel, petrochemicals, fertilizers, and refined oil products. These cities embodied the government’s vision of creating a diversified industrial base, although their contributions were still overshadowed by the oil sector’s dominance. The fourth development plan, spanning 1985 to 1990, considered the kingdom’s basic infrastructure largely complete. Consequently, it emphasized further development of education and vocational training programs, encouraged private enterprise, and actively sought foreign investment through joint ventures. By 1987, these policies had helped the private sector account for approximately 70% of the non-oil gross domestic product (GDP), with increased private investment observed in industry, agriculture, banking, and construction. Government financing and incentives played a crucial role in supporting this private sector growth. During the fourth plan, the government set ambitious targets for private sector ownership in joint ventures, aiming for a range of 70% to 90% ownership by Saudi nationals in most projects. This initiative reflected a strategic intent to foster domestic entrepreneurship and reduce reliance on foreign capital and expertise. The fifth development plan, covering 1990 to 1995, shifted priorities toward consolidating national defense capabilities, improving government social services, promoting regional development, and creating more private-sector employment opportunities for Saudi nationals. A key focus was placed on reducing the number of foreign workers in the kingdom by increasing Saudi participation in the workforce, addressing concerns about the social and economic implications of a large expatriate labor force. The sixth plan, implemented between 1996 and 2000, aimed to lower the cost of government services without reducing their quality or availability. It also sought to expand educational and vocational training programs, diversify economic activities away from petroleum dependence—particularly in industry and agriculture—and intensify efforts to “Saudize” the labor force by increasing Saudi employment in the private sector. The seventh development plan, covering 2000 to 2004, continued to prioritize economic diversification and enhancing the private sector’s role in the economy. It targeted an average annual GDP growth rate of 3.16%, with the private sector expected to grow at 5.04% annually and the non-oil sector at 4.01%. The government set a goal of creating 817,300 new jobs for Saudi nationals during this period, reflecting the ongoing emphasis on employment generation and workforce localization. By 2007, advertising expenditures in Saudi Arabia had reached unprecedented levels, driven largely by a government emphasis on promoting value-added manufacturing industries. This increase in advertising reflected broader efforts to stimulate domestic consumption and support emerging industrial sectors beyond oil. In terms of foreign investment, by 2016 the main investors in Saudi Arabia included the United States, United Arab Emirates, France, Singapore, Kuwait, and Malaysia. These countries primarily invested in sectors such as the chemical industry, real estate, tourism, fossil fuels, automobiles, and machinery, signaling a diversification of foreign capital inflows beyond traditional oil-related activities. As part of its diversification strategy, Saudi Arabia arranged significant refinery contracts with Chinese and other international companies, aiming to expand downstream oil processing capabilities and develop a more integrated petrochemical industry. The kingdom’s accession to the World Trade Organization (WTO) in 2005 further improved the foreign investment environment by providing greater transparency and predictability. Saudi Arabia’s stable economy, vast oil reserves, high consumer spending power, developed infrastructure, and robust financial and banking systems made it an attractive destination for international investors. Following WTO membership, the government developed trade-related policies and legislation aligned with international standards and actively encouraged foreign investment under the framework of Saudi Vision 2030, a comprehensive plan to promote economic diversification and reduce oil dependency. Since 2017, Crown Prince Mohammed bin Salman has spearheaded a series of economic reforms aimed at boosting the kingdom’s economy and curbing its reliance on oil revenues. These reforms included raising gasoline and electricity prices to reduce subsidies, imposing new taxes such as a value-added tax, and prioritizing employment opportunities for Saudi nationals over foreign labor. While these measures were intended to strengthen fiscal sustainability and promote workforce localization, some government officials and Saudi businessmen reported negative economic effects, including a decline in sales during 2018. Critics attributed some of these adverse outcomes to the government’s policies, highlighting the challenges of implementing rapid economic reforms in a traditionally oil-dependent economy. In 2019, the Financial Times reported that plans to float Saudi Aramco, the state-owned oil company, were stalled due to tensions between the company’s close ties to the oil ministry and the desire to meet international corporate governance standards. Energy Minister Khalid Al Falih defended Aramco’s association with the state, describing it as a “win-win policy” that benefited both the company and the government by maintaining strategic control over the kingdom’s most valuable asset. Concurrently, Saudi Arabia embarked on ambitious projects to establish six “economic cities,” including King Abdullah Economic City, designed to diversify the economy and create employment opportunities. These cities, with a total projected construction cost of $60 billion as of 2013, were expected to contribute approximately $150 billion to the economy. However, these economic cities failed to attract the anticipated population and financial investment, limiting their impact on broader economic diversification goals. The privatization program under Saudi Vision 2030 has experienced significant delays, despite oil prices doubling since the program’s inception in 2015. These delays have been exemplified by the postponement of Aramco’s initial public offering (IPO), which was initially viewed as a cornerstone of the kingdom’s privatization and diversification strategy. The International Monetary Fund urged Saudi Arabia in July 2018 to accelerate the privatization process to enhance economic resilience and reduce fiscal dependence on oil revenues. Reports have indicated that the Saudi government is considering granting greater freedoms to foreign investors, including allowing 100% foreign ownership in wholesale and retail sectors under certain conditions, signaling a potential shift toward more open investment policies. The Saudi Ministry of Commerce and Investment projected that GDP per capita would increase from US$20,700 to $33,500 by 2020 as a result of diversification and economic reforms. However, by 2020, GDP per capita had stagnated at approximately US$20,000, reflecting the ongoing challenges faced by the kingdom in achieving its ambitious economic transformation goals. This stagnation underscores the complexities of reducing oil dependency and fostering sustainable growth in a rapidly evolving global economic environment.

As of 2008, the labor market in Saudi Arabia was characterized by a heavy reliance on foreign workers, who constituted approximately two-thirds of the total workforce. This dependence was especially pronounced in the private sector, where foreign employees made up about 90% of all workers. The influx of expatriates was driven by the kingdom’s rapid economic expansion and the limited participation of Saudi nationals in private enterprise, partly due to cultural preferences and the structure of the domestic labor market. Foreign workers, primarily from South Asia and other Arab countries, filled a wide range of positions, from low-skilled manual labor to specialized technical roles, allowing the Saudi economy to sustain its growth despite the relatively low participation of its own citizens. By January 2014, the Saudi government announced significant progress in addressing this imbalance, claiming to have reduced the proportion of foreign workers in the private sector from 90% to a lower figure by substantially increasing Saudi employment in that sector. The government reported that the number of Saudi nationals employed in the private sector had doubled, reaching approximately 1.5 million individuals. This development was set against the backdrop of a total foreign expatriate workforce estimated at around 10 million people working within the kingdom. The government’s efforts were part of a broader strategy to promote “Saudization,” aiming to increase the participation of Saudi citizens in the private labor market and reduce the kingdom’s dependence on foreign labor. Despite these official figures, independent assessments painted a more complex picture of the Saudi labor market. According to Reuters, economists estimated that only 30 to 40 percent of working-age Saudis were either employed or actively seeking employment, a stark contrast to the official unemployment rate, which hovered around 12%. This discrepancy highlighted underlying issues such as discouraged workers who had ceased job searching, structural barriers to employment, and mismatches between the skills of Saudi job seekers and the demands of the labor market. The relatively low labor force participation rate among Saudis was influenced by social norms, educational outcomes, and the attractiveness of public sector employment compared to private sector opportunities. The majority of employed Saudi nationals were concentrated in government positions, where jobs were perceived as more secure, better paid, and socially prestigious. However, this heavy reliance on public sector employment raised sustainability concerns. The International Monetary Fund (IMF) issued warnings that the Saudi government could not maintain such a large public payroll indefinitely, given fiscal pressures and the need to diversify the economy away from oil dependence. The public sector wage bill represented a significant portion of government expenditures, and continued expansion of government employment was seen as fiscally unsustainable in the long term. This underscored the urgency of creating more private sector jobs for Saudi citizens. Since the year 2000, the Saudi government had implemented a series of policies and initiatives collectively known as “Saudization” or “Nitaqat,” designed to increase the employment of Saudi nationals in the private sector and reduce the dominance of foreign workers. These programs set quotas and incentives for companies to hire Saudi employees, with the goal of addressing the dual challenges of high unemployment among Saudis and the large expatriate workforce. Despite these efforts, both the number of foreign workers and the unemployment rate among Saudis continued to rise throughout the 2000s and early 2010s. The persistence of these trends suggested that structural issues in the labor market, such as skills mismatches, wage differentials, and social attitudes toward certain types of work, limited the effectiveness of Saudization policies. Beginning in 2017, Saudi Arabia witnessed a significant outflow of foreign workers, with over 677,000 expatriates leaving the country within that year. This exodus was largely attributed to the government’s imposition of higher fees and levies on foreign workers and their employers, as part of a broader strategy to encourage Saudization and reduce the kingdom’s reliance on expatriate labor. The increased fees raised the cost of employing foreign workers, prompting many companies to either reduce their foreign workforce or replace expatriates with Saudi nationals where possible. This policy shift marked a notable change in the labor market dynamics, reflecting the government’s intensified commitment to transforming the employment landscape. Despite the substantial departure of foreign workers, the unemployment rate among Saudi nationals continued to rise, reaching 12.9%, the highest level recorded in the country’s recent history. This increase underscored the persistent challenges faced by Saudi job seekers in securing employment, particularly in the private sector. The rising unemployment rate suggested that the reduction of foreign workers alone was insufficient to absorb the growing number of Saudi nationals entering the labor market and that additional measures were needed to address underlying structural issues. One of the key factors exacerbating the labor market pressures was the annual influx of approximately 250,000 young Saudis entering the job market. This demographic trend intensified the demand for employment opportunities and placed additional strain on the economy’s ability to create sufficient jobs. The large youth cohort, combined with high expectations for quality employment and social status, complicated efforts to reduce unemployment and increase private sector participation by Saudi nationals. With the initial phase of Saudization policies implemented, the government set specific targets for Saudi employment in various sectors. For example, it was expected that 70% of sales jobs would be filled by Saudi nationals as part of efforts to nationalize the workforce in retail and service industries. However, despite these targets, the private sector remained predominantly staffed by foreign workers, reflecting ongoing challenges in attracting and retaining Saudi employees in these roles. Factors such as wage expectations, working conditions, and social perceptions of certain jobs influenced the slow pace of Saudization in the private sector. The local unemployment rate of 12.9% represented the highest level in more than a decade, highlighting the ongoing difficulties faced by Saudi Arabia in balancing labor market demands with demographic growth and economic diversification goals. This persistent unemployment rate indicated that structural reforms and labor market policies had yet to fully address the core issues affecting Saudi employment. A 2018 report by Bloomberg Economics emphasized the scale of the challenge facing the Saudi government, estimating that approximately 700,000 new jobs would need to be created by 2020 to achieve the government’s target unemployment rate of 9%. This projection underscored the urgency for economic reforms, investment in education and training, and the expansion of the private sector to absorb the growing labor force. The report highlighted the necessity of sustained policy efforts to stimulate job creation and improve labor market outcomes for Saudi nationals. Social resistance emerged as a significant obstacle to employment reform efforts, particularly in sectors such as service and sales. Jobs in these areas were widely regarded as socially unacceptable by many potential Saudi employees, as well as by customers who preferred foreign workers in certain roles. This cultural attitude limited the willingness of Saudis to enter or remain in service-oriented positions, thereby complicating efforts to nationalize the workforce in these sectors. The social stigma attached to certain types of work created a barrier to achieving the desired levels of Saudization and underscored the importance of addressing cultural perceptions alongside economic policies.

Saudi Arabia’s natural resource base extends beyond its vast petroleum reserves to include a variety of mineral deposits scattered throughout the kingdom. These deposits, although relatively small in scale compared to the country’s oil wealth, encompass a diverse range of minerals such as gold, silver, iron, copper, zinc, manganese, tungsten, lead, sulfur, phosphate, soapstone, and feldspar. The presence of these minerals has historically attracted some mining activity, albeit limited, contributing modestly to the non-petroleum sector of the economy. While none of these mineral resources have matched the economic impact of oil, their extraction and processing have provided opportunities for diversification and industrial development within the kingdom. Agriculture in Saudi Arabia occupies a relatively minor role in the national economy, largely due to the country’s arid climate and limited arable land. The agricultural sector is predominantly concentrated in the southwestern region, where the environment benefits from comparatively higher annual rainfall, averaging approximately 400 millimeters (16 inches). This region’s more favorable climate supports the cultivation of various crops and sustains limited farming activities. Despite the challenges posed by water scarcity and desert conditions, the southwestern area remains the heartland of Saudi Arabia’s agricultural production, serving as a vital source of food and raw materials for local consumption. Among the agricultural products cultivated in Saudi Arabia, dates hold a particularly prominent position. The kingdom is internationally recognized as one of the world’s largest producers of dates, a crop that has both cultural and economic significance. Date palms thrive in the country’s climate, and their cultivation has been practiced for centuries, forming an integral part of traditional agriculture. The production and export of dates contribute substantially to the agricultural sector’s output, supporting rural livelihoods and generating foreign exchange earnings. Various varieties of dates are grown, with Saudi Arabia’s date industry benefiting from investments in modern farming techniques and processing facilities to enhance quality and marketability. Wheat cultivation in Saudi Arabia experienced a notable evolution during the early 21st century. Prior to 2009, the kingdom maintained domestic wheat production through extensive irrigation, relying heavily on desalinated water to sustain crop growth in its arid environment. This practice, while enabling self-sufficiency in wheat production, proved to be highly resource-intensive and costly due to the energy demands of desalination and the scarcity of freshwater. Consequently, by 2016, Saudi Arabia phased out wheat cultivation supported by desalinated water as part of a strategic move to conserve water resources and reduce agricultural subsidies. This shift marked a significant change in the country’s agricultural policy, emphasizing sustainability and resource management over self-sufficiency in certain crops. The livestock sector in Saudi Arabia has historically been an important component of the rural economy and food supply. As of 2009, the kingdom’s livestock population was substantial, comprising approximately 7.4 million sheep, 4.2 million goats, 500,000 camels, and 250,000 cattle. These figures reflect a well-established pastoral tradition adapted to the country’s desert and semi-arid environments. Livestock farming supports meat and dairy production, providing essential nutrition and employment for rural communities. Camels, in particular, hold cultural significance and are well-suited to the harsh climatic conditions, while sheep and goats are widely raised for meat and wool. The livestock sector continues to contribute to food security and rural development within Saudi Arabia. The annual Hajj pilgrimage represents a unique and significant economic event for Saudi Arabia, attracting roughly two million pilgrims from around the world. This massive influx of visitors generates substantial temporary employment opportunities, creating approximately 40,000 jobs in various service roles such as butchers, barbers, and coach drivers. Remarkably, the number of people employed during the Hajj pilgrimage in these temporary capacities exceeds the workforce engaged in the oil industry at the same time. The pilgrimage’s labor demand spans a wide range of sectors, including hospitality, transportation, retail, and health services, underscoring its importance as a driver of economic activity beyond the energy sector. Economically, the Hajj pilgrimage contributes significantly to Saudi Arabia’s revenue, generating between US$2 billion and US$3 billion annually. This income stems from the extensive spending by pilgrims on accommodation, food, transportation, souvenirs, and other services during their stay. The pilgrimage’s economic impact extends beyond the immediate region of Mecca, stimulating business activity across the kingdom and supporting government revenues. The financial benefits derived from the Hajj underscore its dual role as both a religious obligation and a critical component of Saudi Arabia’s non-oil economy. In 2008, Saudi Arabia launched the “Initiative for Saudi Agricultural Investment Abroad,” a strategic program aimed at securing food resources by acquiring agricultural land in foreign countries. This initiative led to extensive billion-dollar investments in large tracts of farmland across several nations, including Ethiopia, Indonesia, Mali, Senegal, and Sudan. The acquisitions were motivated by concerns over food security and the desire to ensure stable supplies of agricultural products for the kingdom’s growing population. By investing in overseas agriculture, Saudi Arabia sought to diversify its food sources and reduce dependence on volatile global markets, while also fostering international agricultural development partnerships. However, these overseas land purchases by Saudi Arabia have attracted considerable criticism and controversy, often being labeled as “land-grabbing.” In some host countries, the acquisitions provoked public uproars and disputes over land rights, environmental impacts, and the displacement of local communities. Critics argued that such large-scale land deals prioritized foreign interests over the needs of local populations, exacerbating tensions related to land tenure and food sovereignty. The controversies highlighted the complex ethical and socio-economic dimensions of transnational agricultural investments, raising questions about governance, transparency, and equitable development. Saudi Arabia’s efforts to secure agricultural land abroad occur within a broader international context characterized by competition among several industrializing nations facing similar food security challenges. Countries such as China, South Korea, India, and other Persian Gulf States including Kuwait, Qatar, and the United Arab Emirates have also pursued agricultural land acquisitions overseas. This competitive environment reflects the growing global demand for arable land and resources, as nations seek to safeguard their food supplies amid climate change, population growth, and geopolitical uncertainties. The international race for agricultural land underscores the strategic importance of agriculture in national security and economic planning for many countries beyond their own borders.

In 2010, the Saudi Arabian automotive industry marked a significant milestone with the introduction of the KSU Gazal-1, an SUV that was both developed and manufactured domestically by students at King Saud University. This vehicle represented the first mass-produced automobile to be entirely produced within the Kingdom, symbolizing a pivotal step toward local automotive manufacturing capabilities. The Gazal-1 project not only showcased the technical expertise and innovation fostered within Saudi academic institutions but also demonstrated the potential for homegrown automotive production to contribute to the nation’s industrial diversification efforts. By successfully bringing the Gazal-1 to market, King Saud University set a precedent for future domestic vehicle development initiatives, aligning with broader national goals to reduce reliance on imported vehicles and stimulate economic growth through manufacturing. Building on the momentum of domestic automotive advancements, the Saudi Arabian market attracted significant international investment in the electric vehicle (EV) sector in 2022, when the American EV manufacturer Lucid Motors announced plans to establish a production plant in the city of Jeddah. This strategic move was part of Saudi Arabia’s broader vision to become a regional hub for electric vehicle manufacturing and to diversify its economy beyond oil exports. The announcement underscored the Kingdom’s commitment to adopting sustainable technologies and fostering innovation within its automotive industry. Lucid Motors’ decision to locate its manufacturing facility in Jeddah was influenced by Saudi Arabia’s favorable investment climate, access to regional markets, and the government’s support for advanced manufacturing sectors. Construction of the Lucid Motors manufacturing plant in Jeddah commenced in May 2022, marking the beginning of a major industrial project with an ambitious production capacity. The facility was designed to produce up to 150,000 vehicles annually, positioning it as one of the largest electric vehicle manufacturing plants in the Middle East. This scale of production capacity reflected both the growing demand for electric vehicles in the region and Lucid Motors’ confidence in the Saudi market as a strategic manufacturing and distribution hub. The plant’s establishment was expected to generate significant employment opportunities, stimulate local supply chains, and contribute to the Kingdom’s goals of economic diversification and technological advancement in the automotive sector. Within the Saudi Arabian automotive market, Toyota has consistently maintained its position as the leading brand, commanding approximately 30% of all car sales in the country. This dominant market share reflects Toyota’s strong brand recognition, reputation for reliability, and extensive dealership and service network across Saudi Arabia. The popularity of Toyota vehicles is also supported by their adaptability to the Kingdom’s diverse driving conditions, ranging from urban environments to desert terrains. Toyota’s leadership in the market has influenced consumer preferences and shaped competitive dynamics among automotive manufacturers operating within Saudi Arabia. Following Toyota, the combined market share of the South Korean automotive brands Kia and Hyundai constitutes approximately 26% of the Saudi Arabian car sales market, making them the second most popular automotive brands in the country. The success of Kia and Hyundai can be attributed to their competitive pricing, modern vehicle designs, and increasing focus on quality and technological features. These brands have effectively captured a substantial segment of the Saudi market by appealing to a broad demographic, including younger buyers and those seeking value for money. Their growing presence has intensified competition within the automotive sector and contributed to a more diversified market landscape. The alliance of Renault, Nissan, and Mitsubishi holds a collective market share of about 9% in Saudi Arabia’s automotive sales. This alliance benefits from shared technology platforms, joint research and development efforts, and coordinated marketing strategies, which have enhanced their competitiveness in the Saudi market. The presence of these brands adds variety to the automotive choices available to Saudi consumers, particularly in segments such as compact cars, sedans, and SUVs. Their combined market share, while smaller than that of Toyota and the Korean manufacturers, represents a significant portion of the market and underscores the importance of strategic partnerships in the global automotive industry. The remaining portion of Saudi Arabia’s automotive market share is occupied by the American Big Three automakers: Ford, General Motors (GM), and Chrysler. These manufacturers have historically maintained a presence in the Kingdom, offering a range of vehicles that appeal to various consumer preferences, including trucks, SUVs, and passenger cars. While their combined market share is less than that of the leading Japanese and Korean brands, the American Big Three continue to contribute to the diversity of the automotive market in Saudi Arabia. Their vehicles are often favored for their performance, durability, and brand heritage, particularly among consumers seeking larger vehicles suited for both urban and off-road use. In terms of vehicle sales volume during the first half of 2023, Toyota solidified its position as the market leader in Saudi Arabia by selling 112,584 units. This substantial sales figure highlighted Toyota’s continued dominance and the effectiveness of its sales and marketing strategies within the Kingdom. The strong sales performance also reflected consumer confidence in Toyota’s product lineup and after-sales services. Toyota’s ability to maintain such a high volume of sales amidst increasing competition demonstrated the brand’s resilience and adaptability to evolving market conditions. Hyundai ranked second in vehicle sales volume in Saudi Arabia for the first half of 2023, with 47,218 units sold under its badge. This notable sales performance underscored Hyundai’s growing appeal in the Saudi market and its success in expanding its customer base. Hyundai’s sales figures reflected the brand’s emphasis on innovation, design, and value, which resonated with Saudi consumers. The company’s strategic initiatives, including expanding its dealership network and introducing new models tailored to local preferences, contributed to its strong market position during this period. Together, these sales figures from Toyota and Hyundai illustrate the competitive dynamics and consumer trends shaping the Saudi Arabian automotive industry in the early 2020s.

Saudi Arabia’s private sector has historically been dominated by a relatively small number of large enterprises, many of which operate primarily within the service sector. Among the most prominent industries within this sector are construction and real estate, which have seen significant activity due to the country’s rapid urbanization and infrastructure development. Major companies that have played a critical role in shaping the private sector landscape include conglomerates and specialized firms such as Olayan, Zamil, and Almarai. Telecommunications giants like Mobily, STC, and Zain have also been key players, providing essential communication services across the kingdom. The petrochemical industry features prominently through companies such as SABIC and Sadara, which contribute substantially to the industrial output and export revenues. Additionally, multinational corporations like Halliburton and Baker Hughes have maintained a strong presence, supporting the oil and gas sector with technical services and equipment. The aviation and hospitality sectors have been represented by firms such as Flynas and Hilton, while the construction materials industry includes companies like Yanbu Cement and Alfanar. Retail and media sectors are served by entities such as Alhokair, MBC, and Mahfouz, and the financial services sector is anchored by institutions like Al Rajhi Bank. Collectively, these firms illustrate the concentration of economic power within a limited number of large enterprises that dominate the private sector landscape in Saudi Arabia. The economic vitality of these major private sector firms has been closely tied to government expenditure, which itself is heavily dependent on revenues generated from the country’s vast oil reserves. Saudi Arabia’s economy has long relied on oil as its primary source of income, and fluctuations in global oil prices have had a direct impact on government spending patterns. Consequently, many private enterprises have found their growth and operational capacity contingent upon the scale and continuity of government contracts and investments. This interdependence has created a dynamic in which the private sector’s expansion is often synchronized with the government’s fiscal health, which is largely influenced by the performance of the oil market. The reliance on government expenditure has also meant that diversification efforts within the private sector have faced challenges, as many companies remain tied to sectors that benefit from state funding and patronage. Between 2003 and 2013, the Saudi government embarked on a series of privatization initiatives aimed at transferring the management and operation of several key public services to private entities. These efforts were part of a broader strategy to improve efficiency, foster competition, and stimulate private sector growth. The privatization program covered a range of essential services, including municipal water supply and electricity distribution, sectors that are critical for urban development and public welfare. Telecommunications, a rapidly evolving industry, also underwent partial privatization to encourage investment and technological advancement. In addition to infrastructure-related services, the government extended privatization to social sectors such as education and health care, seeking to enhance service quality and reduce public sector burdens. Traffic control and car accident reporting systems were also included in the privatization agenda, reflecting a comprehensive approach to reforming public service delivery. These measures were intended to create a more vibrant private sector capable of supporting the kingdom’s long-term economic goals. Despite the ambitious privatization drive, consumer feedback on the performance of these newly privatized entities has been mixed and, in many cases, critical. Abdel Aziz Aluwaisheg, a columnist for Arab News, highlighted that consumers have expressed serious concerns regarding the quality, reliability, and responsiveness of services provided by privatized companies across nearly all sectors involved in the reform. Complaints have ranged from inefficiencies and increased costs to inadequate customer service and lack of transparency. These issues have underscored the challenges faced in transitioning from public to private management, including regulatory oversight, market competition, and the need for robust consumer protection mechanisms. The public’s dissatisfaction has prompted calls for further reforms and improvements to ensure that privatization delivers the intended benefits of enhanced service quality and economic efficiency. The food service industry in Saudi Arabia, which remained relatively small and underdeveloped until the 1980s, experienced rapid growth during that decade, reflecting changing consumer lifestyles and increased urbanization. This sector expanded significantly as both domestic demand and international investment increased, contributing to a diversification of the private sector. By the early 21st century, the food service industry had become a substantial component of the economy, with its market value estimated at approximately $13 billion. This growth was driven by a combination of factors, including rising disposable incomes, a young and growing population, and a cultural shift towards dining out and convenience foods. The sector encompasses a wide range of establishments, from traditional eateries and fast-food chains to upscale restaurants and catering services, reflecting the evolving tastes and preferences of Saudi consumers. In an effort to further stimulate private sector activity and support entrepreneurial ventures, the Saudi Cabinet approved a significant policy decision in July 2019 that allowed businesses the option to operate 24 hours a day. This move was designed to enhance the flexibility and competitiveness of private enterprises by enabling extended operating hours, which could attract more customers and increase revenue opportunities. The decision was part of a broader government initiative to create a more business-friendly environment and encourage innovation and investment within the private sector. By removing restrictions on operating hours, the policy aimed to align Saudi Arabia’s commercial practices with international standards and support the kingdom’s Vision 2030 goals of economic diversification and private sector empowerment. By 2023, the average monthly salary for Saudi nationals employed in the private sector had risen to SR9600, marking a substantial increase of 45% from the SR6600 average recorded in 2018. This wage growth reflected ongoing efforts by the government and private sector to improve compensation levels and attract more Saudi nationals into private employment, which has traditionally been dominated by expatriate workers. The increase in salaries was also indicative of broader economic reforms aimed at enhancing labor market conditions, boosting productivity, and reducing reliance on public sector employment. Higher wages in the private sector were expected to contribute to improved living standards for Saudi workers and support the kingdom’s objectives of fostering a competitive and sustainable private economy.

The regional gross domestic product (GDP) data for Saudi Arabia in 2022 was derived by calculating the total national GDP and then allocating portions to each region based on their respective percentage contributions. This method involved dividing the total GDP figure by the percentage share attributed to each province, thereby determining the precise economic output of each region. Such an approach provided a clear picture of the economic distribution across the kingdom’s various administrative divisions, allowing for detailed analysis of regional economic performance within the broader national context. Among all the regions, the Eastern Province emerged as the leading contributor to Saudi Arabia’s GDP in 2022, with an estimated economic output of 243.793 billion US dollars. This figure represented 22% of the country’s total GDP, underscoring the province’s critical role in the national economy. The Eastern Province’s prominence can be largely attributed to its rich natural resources, particularly its vast oil reserves, which have historically driven industrial activity and export revenues. The presence of major oil fields, petrochemical industries, and key ports such as Dammam and Jubail has cemented the province’s status as an economic powerhouse within the kingdom. Equally significant in terms of economic contribution was the Riyadh Province, which matched the Eastern Province with a GDP of 243.793 billion US dollars, also accounting for 22% of Saudi Arabia’s total GDP. Riyadh’s economic strength stems from its position as the capital region and the administrative heart of the country, hosting numerous government institutions, financial centers, and a growing service sector. The province has experienced rapid urbanization and infrastructure development, which have diversified its economy beyond the oil sector to include finance, telecommunications, construction, and retail. This diversification has played a key role in Riyadh’s ability to maintain a GDP contribution on par with the resource-rich Eastern Province. Following these two leading regions, the Mecca Province held the third position in terms of GDP contribution, with an economic output valued at 144.059 billion US dollars. This amount represented 13% of the national GDP, reflecting the province’s significant, though comparatively smaller, role in the kingdom’s overall economy. Mecca Province’s economic activities are influenced by its religious and cultural significance, being home to the holy city of Mecca, which attracts millions of pilgrims annually. The influx of visitors supports a robust hospitality, retail, and services sector, which complements other economic activities such as manufacturing and trade. The province’s strategic location along the Red Sea coast also facilitates commercial and logistical operations, further enhancing its economic profile. The remaining provinces, when combined, contributed a total GDP of 476.504 billion US dollars, accounting for 43% of Saudi Arabia’s total economic output. This aggregate figure highlights the substantial economic activity occurring outside the three leading provinces of Eastern, Riyadh, and Mecca. These other regions encompass a diverse range of economic sectors, including agriculture, mining, manufacturing, and emerging industries aligned with the kingdom’s Vision 2030 economic diversification plan. Provinces such as Medina, Asir, Tabuk, and Najran, among others, have been developing their local economies through investments in infrastructure, tourism, and renewable energy projects, contributing meaningfully to the national GDP despite their smaller individual shares. The total GDP of Saudi Arabia for the year 2022 was reported as 1,108.149 billion US dollars, representing the entirety of the kingdom’s economic output for that period. This figure encapsulates the combined contributions of all provinces and sectors, reflecting the scale and complexity of Saudi Arabia’s economy. The distribution of GDP across regions illustrates the kingdom’s economic landscape, where resource-rich areas coexist with administrative and service-oriented hubs, alongside emerging provinces striving for economic diversification. The 2022 data serves as a benchmark for assessing regional economic performance and guiding policy decisions aimed at balanced and sustainable growth throughout the country.

In April 2000, the Saudi Arabian government took a significant step toward economic diversification and globalization by establishing the Saudi Arabian General Investment Authority (SAGIA). This entity was designed to promote and encourage foreign direct investment (FDI) within the kingdom, aiming to attract international investors and facilitate their entry into various sectors of the Saudi economy. SAGIA’s creation marked a strategic initiative to reduce the kingdom’s dependence on oil revenues by fostering a more open and competitive investment climate. By streamlining regulatory processes and offering incentives, SAGIA sought to position Saudi Arabia as a favorable destination for foreign capital, technology transfer, and expertise. Despite these efforts to attract foreign investment, Saudi Arabia maintained a negative list that specified sectors where foreign investment was prohibited or severely restricted. This list reflected the government’s cautious approach to liberalization, aimed at protecting national interests and ensuring control over strategic industries. However, the Saudi government planned a gradual liberalization process, signaling its intent to open previously closed sectors such as telecommunications, insurance, and power transmission and distribution to foreign investors. This phased approach was intended to balance the benefits of increased foreign participation with the need to safeguard critical infrastructure and services. The opening of these sectors was expected to enhance competition, improve service quality, and stimulate innovation, thereby contributing to the broader goals of economic reform and diversification under the kingdom’s Vision 2030 framework. Saudi Arabia’s integration into the global trading system was further solidified when it became a full member of the World Trade Organization (WTO) on 11 December 2005. This milestone represented a major step in aligning the kingdom’s trade policies and regulations with international standards and commitments. Accession to the WTO required Saudi Arabia to undertake significant reforms, including tariff reductions, transparency improvements, and the establishment of dispute resolution mechanisms consistent with WTO rules. Membership facilitated greater access to global markets for Saudi exports and provided a platform for resolving trade disputes through multilateral negotiations. It also underscored the kingdom’s commitment to liberalizing its trade regime and fostering a more predictable and stable environment for both domestic and foreign businesses. In 2019, the Saudi government established the General Authority for Foreign Trade, reflecting a continued focus on enhancing the kingdom’s international commercial and investment activities. This new authority was tasked with promoting Saudi exports, facilitating trade agreements, and coordinating trade policies to support the country’s economic diversification objectives. By centralizing trade-related functions, the General Authority for Foreign Trade aimed to improve the efficiency and effectiveness of Saudi Arabia’s engagement with global markets. Its establishment also aligned with broader efforts to strengthen institutional frameworks that support the kingdom’s transition toward a more open and competitive economy, as outlined in Vision 2030. In early July 2020, Saudi Arabia nominated Mohammad Al-Tuwaijri, a prominent figure who had previously served as the Minister of Economy and as an adviser to the Saudi royal court, for the position of director-general of the World Trade Organization. This nomination highlighted Saudi Arabia’s ambition to play a more influential role in shaping the future of the global trade system. Al-Tuwaijri’s candidacy was seen as an opportunity for the kingdom to demonstrate its commitment to international trade governance and to contribute to the reform and modernization of the WTO. His background in economic policy and experience within the Saudi government positioned him as a candidate with significant expertise in trade and economic affairs. However, the nomination of Al-Tuwaijri occurred approximately one month after the WTO had reported Saudi Arabia for copyright infringement related to the distribution of pirated sports broadcasting content via the state-owned broadcaster BeoutQ. This controversy centered on allegations that BeoutQ had illegally retransmitted sports events, undermining intellectual property rights and causing significant losses to rights holders. The issue attracted widespread international attention and criticism, raising questions about Saudi Arabia’s adherence to WTO rules and intellectual property protections. The timing of Al-Tuwaijri’s nomination in the wake of these allegations added a layer of complexity to his candidacy and drew scrutiny from various stakeholders. Human rights groups voiced strong criticism of Al-Tuwaijri’s nomination in mid-August 2020, urging WTO members to reject his candidacy on the grounds of Saudi Arabia’s documented human rights violations. These organizations highlighted concerns about the kingdom’s record on freedom of expression, political repression, and treatment of dissidents, arguing that such issues were incompatible with the principles of transparency and fairness that underpin the WTO. Additionally, critics pointed to Al-Tuwaijri’s silence on these human rights concerns, suggesting that his leadership would not adequately address or acknowledge these systemic problems. The opposition from human rights advocates underscored the broader geopolitical and ethical considerations that often intersect with international appointments and trade diplomacy. On 7 October 2020, Mohammad Al-Tuwaijri’s bid for the WTO director-general position was unsuccessful due to insufficient support among member states. The final round of the selection process included nominees from Nigeria and South Korea, while candidates from the United Kingdom and Kenya were also eliminated alongside Al-Tuwaijri. The outcome reflected the competitive nature of the WTO leadership race and the complex dynamics of international consensus-building. The selection of the WTO director-general involves balancing regional representation, expertise, and political considerations, and Al-Tuwaijri’s defeat indicated that Saudi Arabia’s candidacy did not garner the necessary backing to secure the role. Saudi Arabia’s participation in the global trade system extends beyond its WTO membership. The kingdom is also a member of several key international trade and economic organizations, including the International Monetary Fund (IMF), the International Chamber of Commerce (ICC), the International Organization for Standardization (ISO), and the World Customs Organization (WCO). Membership in these institutions enables Saudi Arabia to engage with global economic governance frameworks, adopt international standards, and collaborate on issues such as trade facilitation, customs procedures, and economic policy coordination. Through active involvement in these organizations, Saudi Arabia seeks to enhance its trade infrastructure, improve regulatory practices, and integrate more fully into the global economy, supporting its broader development and diversification goals.

The Saudi economy has confronted multiple significant challenges that have impeded its progress toward sustained and inclusive growth. One of the foremost difficulties has been halting or reversing the decline in per capita income, a crucial indicator for improving the overall living standards of the population. Despite the Kingdom’s substantial oil wealth, fluctuations in global oil prices and demographic pressures have contributed to stagnation or erosion in individual income levels, thereby limiting the capacity of many Saudi citizens to achieve higher quality of life and economic security. This decline in per capita income underscores the need for structural reforms aimed at broadening economic opportunities and distributing wealth more equitably across society. Central to addressing these economic challenges is the imperative to improve the education system, which plays a pivotal role in preparing Saudi youth for meaningful participation in the workforce. Historically, the education sector in Saudi Arabia has faced criticism for its limited alignment with labor market demands, resulting in a mismatch between graduates’ skills and the requirements of employers. Enhancing the quality and relevance of education is essential to equip young Saudis with the competencies necessary for the rapidly evolving job market, including critical thinking, technical expertise, and adaptability. Such improvements are expected to increase employment opportunities for the Kingdom’s burgeoning youth population and reduce reliance on expatriate labor, which has long dominated certain sectors of the economy. Economic diversification remains a key challenge for Saudi Arabia, as the country seeks to reduce its heavy dependence on oil revenues that have historically underpinned its fiscal and economic stability. The volatility of oil markets and the finite nature of hydrocarbon resources have made it imperative for the Kingdom to develop alternative sectors such as manufacturing, tourism, finance, and technology. Diversification efforts aim to create a more resilient and sustainable economic base that can generate employment, foster innovation, and attract foreign investment. Initiatives like Saudi Vision 2030 have been launched to accelerate this transformation, focusing on expanding non-oil industries and promoting private sector growth as pillars of long-term economic sustainability. Stimulating the private sector is another critical component in overcoming the Kingdom’s economic challenges, particularly in terms of job creation and fostering economic dynamism beyond the public sector’s traditional dominance. The public sector has historically been the largest employer in Saudi Arabia, offering relatively secure and well-compensated positions that have often discouraged private enterprise development. Encouraging entrepreneurship, reducing regulatory barriers, and improving the business environment are necessary steps to invigorate the private sector, which can serve as a major engine for innovation, competitiveness, and employment generation. By shifting the labor market balance toward private sector participation, Saudi Arabia aims to create a more diversified and resilient economy capable of sustaining growth even in the face of global economic uncertainties. The rapid population growth in Saudi Arabia has also placed considerable pressure on housing infrastructure, making the increase in housing construction a vital objective for the government. Meeting the growing demand for residential units is essential not only to accommodate demographic expansion but also to improve living conditions and support urban development. The government has implemented various housing programs and subsidies to facilitate home ownership and expand affordable housing options for Saudi citizens. These efforts are aimed at reducing housing shortages, curbing informal settlements, and stimulating related sectors such as construction and real estate, which contribute to broader economic activity. Addressing and diminishing corruption and inequality have emerged as vital priorities to promote fair economic participation and social stability within the Kingdom. Corruption, whether perceived or actual, undermines public trust, distorts markets, and hampers efficient allocation of resources, thereby impeding economic growth and development. Efforts to enhance transparency, strengthen legal frameworks, and enforce anti-corruption measures have been undertaken to create a more equitable economic environment. Similarly, tackling inequality—whether in income distribution, access to education, or employment opportunities—is essential to ensure that the benefits of economic progress are shared broadly across all segments of society. Reducing disparities contributes to social cohesion, political stability, and a more inclusive economy capable of harnessing the full potential of its human capital. The United Nations Arab Human Development Report has highlighted the Saudi economy’s heavy reliance on foreign labor as a symptom of deeper social and economic development challenges. This dependence has been attributed to several interrelated factors, including a lack of personal freedom, which restricts individual initiative and entrepreneurship, and the poor quality of education that fails to prepare nationals adequately for the labor market. Additionally, government hiring practices have often been based on criteria that are not meritocratic, limiting opportunities for capable Saudi citizens to secure employment in both public and private sectors. Moreover, the exclusion of women from many economic roles has further constrained the labor pool and economic productivity. These factors collectively have stunted social and economic development by preventing the full mobilization of the Kingdom’s human resources and perpetuating reliance on expatriate workers to fill critical roles in the economy. Addressing these issues requires comprehensive reforms aimed at expanding personal freedoms, improving education quality, adopting merit-based employment policies, and promoting gender inclusion in the workforce.

Despite possessing the second largest petroleum reserves in the world, Saudi Arabia experienced a significant decline in per capita income over the late 20th century and early 21st century. At the height of the oil boom in 1981, the country’s per capita income was estimated to be approximately $18,000. However, by 2001, this figure had fallen dramatically to around $7,000, according to one estimate. This substantial reduction reflected the volatility of oil markets and the challenges faced by an economy heavily reliant on petroleum exports. The decline in per capita income was not solely a result of fluctuating oil prices but was also influenced by demographic changes and structural economic factors. By 2013, the rapid population growth in Saudi Arabia had further exacerbated the decline in per capita income, placing it at a level that was described as “a fraction of that of smaller Persian Gulf neighbors.” Notably, Saudi Arabia’s per capita income was even lower than that of Bahrain, a country with far fewer petroleum resources. This disparity underscored the complex dynamics of economic growth in the Gulf region, where smaller states with diversified economies or smaller populations sometimes outperformed larger oil producers in terms of income per capita. The rapid increase in population diluted the wealth generated by oil revenues, as the same or slightly increased national income had to be distributed among a much larger number of people. Unlike most developed economies, where gross domestic product (GDP) growth is largely driven by improvements in productivity, technological advancements, and increases in labor force participation, Saudi Arabia’s domestic production growth or contraction has historically been closely tied to fluctuations in oil prices. The country’s economic performance was therefore highly vulnerable to external shocks in global energy markets. When oil prices rose, Saudi Arabia’s GDP and government revenues expanded rapidly, but when prices fell, the economy faced contraction and fiscal deficits. This dependence on a single commodity made economic planning and diversification efforts particularly challenging. Concerns about the sustainability of Saudi Arabia’s oil-based income have been raised by various observers, including Middle East journalist Karen House. She noted that Saudi oil reserves were being steadily depleted over time, with no significant new discoveries to replenish the reserves. This depletion raised long-term questions about the viability of relying predominantly on oil revenues to sustain economic growth and public expenditures. The finite nature of oil reserves, combined with increasing domestic consumption, meant that the country faced mounting pressure to develop alternative sources of income and reduce its dependence on hydrocarbons. Demographic trends further complicated the economic landscape. From 1960 to 2010, Saudi Arabia’s population increased sevenfold, a remarkable demographic expansion that placed additional demands on infrastructure, social services, and employment. Despite this rapid population growth, petrol prices in Saudi Arabia remained heavily subsidized by the government, making fuel extraordinarily cheap for consumers. In fact, the cost of petrol was often less than that of equivalent quantities of bottled water, reflecting the government’s policy to maintain low energy prices as a means of supporting domestic consumption and social stability. These subsidies, while popular, also contributed to rising domestic energy consumption and fiscal burdens. With oil production remaining largely stagnant and the population continuing to grow, the per capita income in Saudi Arabia tended to decline unless oil prices increased proportionally to offset these factors. The combination of rising domestic energy consumption, limited growth in oil output, and expanding population meant that the oil wealth had to be shared among more people, reducing the average income per individual. This dynamic underscored the vulnerability of the Saudi economy to demographic pressures and the importance of achieving economic diversification to maintain or increase living standards. In response to these challenges, Saudi Arabia embarked on a series of ambitious initiatives post-2015 aimed at reducing its dependence on oil revenues. Central to these efforts was Vision 2030, a comprehensive reform plan launched by the government to diversify the economy by investing in non-oil sectors such as tourism, entertainment, and technology. Vision 2030 sought to transform the Saudi economy by fostering private sector growth, attracting foreign investment, and developing new industries that could generate sustainable income streams beyond hydrocarbons. This strategic shift was intended to create jobs, stimulate innovation, and reduce the economic volatility associated with oil price fluctuations. Despite a decline in the oil sector’s contribution to GDP, Saudi Arabia’s overall economic output was projected to grow due to expansion in non-oil sectors. The diversification efforts began to bear fruit as industries such as manufacturing, construction, finance, and services expanded, helping to offset the contraction in oil-related activities. This structural transformation was critical for the country’s long-term economic stability and growth prospects, as it aimed to build a more resilient and balanced economy less susceptible to external shocks. However, economic performance in the short term remained mixed. In the second quarter of 2024, Saudi Arabia’s GDP contracted by 0.4% year-on-year, a decline primarily driven by an 8.5% reduction in oil-related activities. This contraction reflected ongoing challenges in the global oil market and domestic production constraints. Nonetheless, the non-oil sectors demonstrated resilience and growth, expanding by 4.4% during the same quarter. This robust performance in non-oil activities contributed to a seasonally adjusted GDP growth of 1.4% compared to the previous quarter, indicating a gradual shift towards a more diversified economic base. As of 2024, Saudi Arabia’s GDP per capita had surpassed that of all Gulf Cooperation Council (GCC) countries except Qatar and the United Arab Emirates. This improvement in per capita income reflected the combined effects of economic diversification, population dynamics, and global market conditions. The country’s nominal GDP per capita was estimated at approximately $33,040, ranking it 35th globally among nations. This ranking placed Saudi Arabia among the upper-middle-income countries, reflecting its status as a major regional economic power. When measured in purchasing power parity (PPP) terms, which adjust for differences in price levels between countries, Saudi Arabia’s GDP per capita was estimated at $70,333 in 2024. This figure ranked the country as the 15th highest worldwide, highlighting the relatively high standard of living enjoyed by many Saudi citizens when accounting for the cost of living. The PPP-adjusted income level underscored the country’s economic strength and the benefits derived from its substantial natural resource wealth, as well as the ongoing efforts to diversify and modernize the economy.

As of February 2012, Saudi Arabia’s population exhibited a notably youthful demographic profile, with approximately 51 percent of its total population being under the age of 25. This predominance of young individuals underscored the country’s demographic momentum, reflecting high birth rates in preceding decades and contributing to a rapidly expanding labor force. The youthful composition of the population presented both opportunities and challenges for the Saudi economy, as a large cohort of young people would soon be seeking education, training, and employment. This demographic trend was significant in shaping government policies related to education, workforce development, and economic diversification, as the nation sought to harness the potential of its young population while addressing the risks associated with high youth unemployment. In 2013, the International Monetary Fund (IMF) released a report projecting labor market developments in the Persian Gulf region, with a particular focus on the influx of young nationals entering the workforce. According to this report, up to 1.6 million young nationals from the Persian Gulf countries were expected to join the labor market between 2013 and 2018. Saudi Arabia, as the largest economy in the region and the most populous country among the Gulf Cooperation Council (GCC) states, was identified as the primary contributor to this demographic surge in labor supply. The projection highlighted the scale of the challenge facing Saudi Arabia, as the country needed to absorb a substantial number of new job seekers within a relatively short timeframe. This influx was driven by the large youth population and the natural progression of individuals reaching working age, emphasizing the urgency of expanding employment opportunities and enhancing workforce readiness. The same IMF report also underscored a critical employment challenge confronting the Persian Gulf economies, including Saudi Arabia. It noted that the private sector in these countries would be capable of providing jobs for fewer than half of the new entrants to the labor market during the 2013–2018 period. Specifically, the private sector was projected to create approximately 600,000 jobs, leaving a significant gap between labor supply and demand. This shortfall highlighted structural issues within the regional economies, such as a heavy reliance on public sector employment, limited private sector diversification, and challenges in creating sufficient high-quality private sector jobs attractive to young nationals. The report emphasized the need for policy reforms aimed at stimulating private sector growth, improving labor market flexibility, and enhancing the employability of young workers. For Saudi Arabia, this meant intensifying efforts to diversify its economy beyond oil dependence, promoting entrepreneurship, and investing in education and vocational training to better align workforce skills with market needs. The employment challenge was further complicated by social and economic expectations, as many young Saudis preferred public sector jobs due to perceived job security and benefits, making private sector employment less appealing despite the growing demand for labor market expansion.

The Saudi government previously sought to increase employment opportunities for Saudi citizens by implementing a policy that mandated companies to fill at least 30% of their positions with Saudi nationals, as reported by The Economist. This initiative, aimed at addressing high unemployment rates among Saudis and reducing reliance on foreign labor, was part of a broader effort to nationalize the workforce, commonly referred to as “Saudization.” However, this policy encountered significant resistance from employers within the country. Many business owners and managers voiced strong dissatisfaction, arguing that the young Saudi workforce lacked the necessary skills and competencies to meet the demands of the private sector. They attributed these shortcomings primarily to the education system, which they criticized for emphasizing rote memorization and religious instruction over practical and market-relevant skills. This educational approach, they contended, failed to adequately prepare Saudi youth for the challenges and requirements of the modern job market. Critics of the Saudization policy further highlighted the difficulties faced by young Saudi workers in competing with foreign laborers, who often accepted lower wages and less comprehensive compensation packages. Many foreign workers in Saudi Arabia hailed from Asian countries, the Indian subcontinent, and less affluent Arab nations, where economic conditions and labor market dynamics compelled them to accept employment terms that Saudi nationals found unattractive. This wage disparity created a competitive disadvantage for Saudi workers, who expected higher remuneration aligned with their socio-economic status and educational background. Consequently, the private sector’s working environment, culture, and conditions were originally tailored to accommodate very low-income foreign workers rather than the medium-income, relatively well-educated Saudi population. This mismatch between the labor market conditions and the expectations of Saudi nationals further complicated efforts to increase Saudi employment within private enterprises. Due to these persistent challenges, the initial 30% Saudi employment quota was eventually abandoned and replaced with a more flexible system that sought to balance the interests of employers and Saudi workers. The revised approach aimed to encourage gradual integration of Saudi nationals into the workforce while recognizing the practical limitations posed by the existing labor market structure and educational outcomes. This shift reflected an acknowledgment of the complexities involved in transforming the composition of the workforce in a country heavily reliant on expatriate labor. Scholar David Commins has noted that Saudi Arabia continues to depend heavily on large numbers of expatriate workers to fill technical and administrative roles across various sectors. This reliance is partly attributed to deficiencies within the Saudi education system, which, despite receiving generous government funding, has struggled to produce graduates equipped with the skills demanded by the economy. Commins identifies several critical shortcomings in the education system, including poorly trained teachers who lack the pedagogical skills necessary to foster critical thinking and practical competencies. Additionally, student retention rates remain low, undermining the development of a consistently skilled labor pool. The system also suffers from a lack of rigorous academic standards, which diminishes the quality and competitiveness of Saudi graduates in both local and international contexts. Moreover, the education system’s curriculum places an excessive emphasis on religious subjects at the expense of scientific and technical instruction. This imbalance has contributed to a workforce that is less prepared to engage with the technical and administrative challenges of a modernizing economy. The limited focus on science, technology, engineering, and mathematics (STEM) fields has hindered the development of a knowledge-based economy and constrained the ability of Saudi nationals to assume roles that require specialized expertise. A 2015 survey conducted by Bayt.com, a prominent employment website in the Middle East and North Africa, underscored the widespread perception of a skills shortage across the region. The survey revealed that 28% of professionals in North Africa and the Middle East believed their country of residence suffered from an inadequate supply of skilled workers. This perception was even more pronounced in Saudi Arabia, where 39% of respondents identified a lack of adequate skills among the workforce as a significant issue. This data highlights the persistent challenges faced by Saudi Arabia in aligning its educational outcomes with labor market needs and underscores the ongoing difficulties in reducing dependence on expatriate labor through workforce nationalization policies. Together, these factors illustrate the complex interplay between education, labor market dynamics, and economic policy in Saudi Arabia. The government’s efforts to increase Saudi employment in the private sector have been constrained by systemic educational deficiencies and structural labor market conditions that favor low-cost foreign workers. Addressing these challenges requires comprehensive reforms in education and workforce development to equip Saudi nationals with the skills and competencies necessary to compete effectively in a rapidly evolving economy.

Saudi Arabia has historically not been recognized as a major hub for technological innovation, a fact reflected in the relatively low number of patents it registered on the international stage. This limited innovation output can be traced through patent registration data, particularly in the United States, which serves as a key indicator of global technological advancement. Between 1977 and 2010, Saudi Arabia registered a total of only 382 patents with the United States Patent and Trademark Office (USPTO), averaging fewer than twelve patents per year over this 33-year period. This modest figure underscored the kingdom’s relatively nascent position in the global innovation landscape during the late 20th and early 21st centuries. When placed in comparative context, the disparity in patent activity becomes even more pronounced. For instance, South Korea, a country widely recognized for its rapid technological development and innovation, registered 84,840 patents with the USPTO during the same timeframe. Similarly, Israel, another nation known for its robust innovation ecosystem, registered 20,620 patents in the United States between 1977 and 2010. These figures highlight a substantial gap in innovation output, with Saudi Arabia trailing far behind these countries despite its considerable economic resources. The contrast illustrates how technological innovation had not been a primary focus of Saudi Arabia’s economic development strategy during much of the late 20th century, when the kingdom’s economy was largely driven by oil revenues rather than knowledge-based industries. However, this historical trend began to shift in the years following 2010, as Saudi Arabia started to place greater emphasis on fostering innovation and diversifying its economy. By 2017, the kingdom experienced a notable increase in patent activity, signaling an emerging transformation in its innovation capacity. In that year alone, Saudi Arabia was granted 664 patents by the USPTO, a dramatic rise compared to its previous annual averages. This surge in patent grants reflected the impact of various government initiatives aimed at boosting research and development, encouraging entrepreneurship, and expanding the knowledge economy. The increase also suggested a growing recognition among Saudi inventors and companies of the importance of securing intellectual property rights in global markets. The 2017 patent figures positioned Saudi Arabia prominently on the international stage, as the kingdom ranked 23rd among 92 countries in terms of the number of patents granted by the USPTO. This ranking marked a significant improvement from its earlier standing and demonstrated the country’s enhanced capacity for innovation relative to other nations. The rise in patent activity was indicative of broader efforts by the Saudi government to align with global technological trends and to develop sectors such as information technology, renewable energy, biotechnology, and advanced manufacturing. These sectors were identified as critical to the kingdom’s Vision 2030 plan, which aims to reduce dependence on oil and establish a more diversified and sustainable economy. Moreover, the 664 patents granted to Saudi Arabia in 2017 were twice the total number of patents granted to all other Arab countries combined during that year. This statistic underscored Saudi Arabia’s leading position in innovation within the Arab region, highlighting its role as a regional pioneer in technological development. While other Arab countries continued to face challenges related to research infrastructure, funding, and talent retention, Saudi Arabia’s relatively higher patent output suggested a more conducive environment for innovation. This leadership was further supported by increased investment in education, science and technology parks, and partnerships with international research institutions, all of which contributed to the kingdom’s growing prominence in the global innovation ecosystem. In summary, although Saudi Arabia’s historical record in technological innovation was modest, characterized by low patent registration rates compared to global leaders, the kingdom has made significant strides in recent years. The marked increase in patent grants by 2017, coupled with its improved international ranking and dominance within the Arab world, reflects a concerted effort to transform its economy through innovation. This evolving landscape signals a shift towards greater emphasis on knowledge-based industries and technological advancement as key drivers of future economic growth.

Business journalist Karen House provided a critical analysis of the bureaucratic landscape surrounding the establishment of new enterprises in Saudi Arabia, highlighting its inherent complexity and inefficiency. She observed that the process of starting a business in the kingdom was burdened by a labyrinthine administrative framework, requiring prospective entrepreneurs to navigate a multitude of applications and documentation demands. These requirements spanned across several layers of government ministries, each imposing distinct procedural hurdles that collectively prolonged and complicated the business initiation phase. House’s critique underscored how this multifaceted bureaucratic environment not only delayed business formation but also created significant barriers to entry for individuals lacking insider knowledge or influential connections. According to House, the procedural demands extended far beyond mere paperwork, necessitating interactions with various bureaucratic entities that operated within overlapping jurisdictions. An individual seeking to establish a business had to submit numerous applications, permits, and certifications to different government departments, each with its own set of criteria and timelines. This fragmented approach often led to redundancies and inconsistencies, as entrepreneurs were required to provide similar information multiple times to different agencies. The absence of a streamlined, centralized system compounded the difficulty of compliance, forcing applicants to invest considerable time and resources just to meet the formal prerequisites for business registration. The bureaucratic process in Saudi Arabia was further complicated by the entrenched system of patronage networks that permeated the administrative apparatus. House emphasized that successfully navigating the regulatory maze typically involved soliciting favors from multiple patrons embedded within these networks, which functioned as informal power brokers within the government and business sectors. Entrepreneurs found themselves compelled to cultivate relationships with these patrons to expedite approvals, resolve bureaucratic obstacles, or gain preferential treatment. This dynamic fostered a reciprocal system of obligations, whereby individuals accumulated debts of loyalty and favors owed to various patrons, effectively intertwining business success with the maintenance of these patron-client relationships. This patronage system also had tangible implications for the operational aspects of newly established businesses. House noted that the process often entailed the requirement to hire dependents or affiliates of patrons, regardless of their qualifications or competence. Such hiring practices were not merely symbolic but served as a means of reinforcing the patronage ties that underpinned the business environment. Consequently, business owners frequently had to accommodate the employment of less-than-competent individuals connected to their patrons, which could undermine operational efficiency and decision-making. This phenomenon illustrated how the bureaucratic and patronage systems were mutually reinforcing, with the latter shaping workforce composition and internal management structures within Saudi enterprises. In the broader context of the Saudi economy, government contracts emerged as a critical source of financial sustenance for businesses of all sizes. Unlike economies driven predominantly by private sector competition and market forces, Saudi businesses often relied heavily on securing contracts from government agencies and state-owned enterprises to generate revenue. This reliance on government procurement created a business ecosystem where public sector engagement was not just advantageous but essential for survival and growth. The predominance of government contracts as the primary financial lifeline underscored the limited role of open market competition in fostering entrepreneurial dynamism within the kingdom. Engagement with government contracts further entrenched the patronage dynamics that characterized the Saudi business environment. To obtain these contracts, businesses were required to interact with additional patrons who controlled access to lucrative government projects and procurement opportunities. This interaction necessitated securing favors and cultivating relationships within the corridors of power, thereby deepening the web of obligations and reciprocal exchanges. The pursuit of government contracts thus perpetuated a cycle of dependency on patronage networks, as firms had to continuously navigate political and social alliances to maintain their competitive standing and financial viability. As a consequence of these intertwined bureaucratic and patronage-based factors, the Saudi domestic business environment remained highly restrictive and insular. The structural reliance on government contracts and patronage networks limited the capacity of Saudi businesses to compete effectively outside the protected domestic market. Only a relatively small number of firms demonstrated the ability to operate successfully in international or more competitive arenas, reflecting the challenges posed by the kingdom’s regulatory and social frameworks. This restrictive environment inhibited the development of a robust, diversified private sector capable of driving sustained economic growth independent of state patronage, highlighting the need for reforms aimed at enhancing transparency, efficiency, and market openness within Saudi Arabia’s economic system.

The estimated annual cost of maintaining the Saudi Royal Family has been reported to be approximately US$10 billion. This substantial expenditure reflects the extensive privileges, security arrangements, and administrative support required to sustain the large and influential House of Saud, which plays a central role in the governance and social structure of the Kingdom. The financial outlay covers a wide range of expenses, including royal stipends, official residences, travel, and the funding of various royal projects and patronage networks. Such a significant allocation of state resources to the royal family has often been scrutinized in discussions about public spending and economic priorities within Saudi Arabia. Concerns about corruption and the need to circumvent legal regulations have been prevalent among the Saudi business community for many years. A survey conducted in 2005 by the Riyadh Chamber of Commerce revealed that 77% of businessmen polled believed they had to bypass official legal frameworks in order to conduct their business operations effectively. This finding underscored a widespread perception that the regulatory environment was either overly burdensome or inconsistently enforced, compelling entrepreneurs and companies to engage in unofficial practices to navigate bureaucratic obstacles. The survey highlighted systemic challenges within the Saudi economic and legal systems, where informal networks and discretionary decision-making often played a critical role in business transactions. By 2012, the perception among Saudi businessmen had deteriorated further, with many expressing increased frustration over the persistence and perhaps intensification of the need to circumvent legal regulations. This worsening sentiment suggested that efforts to reform the business environment and enhance transparency had either stalled or failed to address the underlying causes of corruption and regulatory inefficiency. The continued reliance on informal practices to secure business deals and approvals not only undermined the rule of law but also contributed to an uneven playing field, where connections and personal influence often trumped merit and compliance. This environment posed significant challenges for foreign investors and hindered the Kingdom’s broader ambitions to diversify its economy beyond oil dependence. Internationally, Saudi Arabia has faced significant criticism regarding its efforts to combat money laundering and the financing of international terrorism. Various global watchdogs and financial regulatory bodies have pointed to deficiencies in the Kingdom’s legal and institutional frameworks designed to detect, prevent, and prosecute illicit financial activities. These shortcomings have raised concerns about Saudi Arabia’s role as a potential conduit for the movement of illicit funds, which could undermine global financial integrity and security. The criticism has been particularly pointed given the Kingdom’s strategic importance and its extensive financial transactions on the international stage. On 24 September 2018, the Financial Action Task Force (FATF), an intergovernmental body established to set standards and promote effective implementation of legal, regulatory, and operational measures for combating money laundering and terrorist financing, released a report assessing Saudi Arabia’s performance in these areas. The FATF report stated that Saudi Arabia was not effectively investigating or prosecuting individuals involved in large-scale or professional money laundering activities. This assessment indicated that despite some institutional mechanisms being in place, enforcement actions remained insufficient to deter or disrupt sophisticated financial crimes. The report highlighted gaps in the investigative processes, legal proceedings, and overall commitment to addressing high-level money laundering cases. Furthermore, the FATF report emphasized that Saudi Arabia was not effectively confiscating the proceeds derived from criminal activities related to money laundering. The failure to seize illicit assets undermined efforts to dismantle criminal enterprises and recover funds that could be redirected toward legitimate economic development. This deficiency suggested weaknesses in asset tracing, international cooperation, and legal frameworks necessary to support comprehensive financial crime enforcement. The inability to confiscate criminal proceeds also diminished the deterrent effect of anti-money laundering policies and contributed to the Kingdom’s ongoing challenges in aligning with international standards. Taken together, these issues reflect complex and entrenched challenges within Saudi Arabia’s economic and regulatory systems. The high cost of maintaining the royal family, combined with widespread perceptions of corruption and regulatory circumvention, has created an environment where informal practices thrive. Meanwhile, international criticism and formal assessments by bodies such as the FATF have underscored the Kingdom’s struggles to effectively combat money laundering and terrorist financing. These challenges have significant implications for Saudi Arabia’s economic development, international reputation, and efforts to integrate more fully into the global financial system.

Estimates of the proportion of native Saudis living below the poverty line vary considerably, with figures ranging from 12.7% to as high as 25%. Press reports and private assessments from 2013 suggested that between 2 million and 4 million Saudi nationals subsisted on less than approximately $530 per month, which translates to about $17 per day. This threshold is commonly regarded as the poverty line within Saudi Arabia, reflecting the minimum income necessary to meet basic living expenses in the country. These estimates underscore the presence of a significant segment of the native population grappling with economic hardship despite the nation’s overall wealth and oil-driven economy. Comparative data from the United Nations Economic and Social Commission for Western Asia (UNESCWA) further contextualizes Saudi Arabia’s poverty situation within the Gulf Cooperation Council (GCC) region. According to recent UNESCWA reports, Oman and Saudi Arabia exhibit the highest poverty rates among GCC member states, with Oman’s rate at 10.1% and Saudi Arabia’s at 13.6%. These figures highlight the unique socioeconomic challenges faced by these two countries in contrast to their wealthier neighbors such as the United Arab Emirates, Qatar, and Kuwait, where poverty rates are comparatively lower. The relatively elevated poverty levels in Saudi Arabia and Oman reflect structural economic issues, including unemployment and income inequality, that persist despite the region’s overall affluence. Over the past decade, Saudi Arabia witnessed a notable decline in poverty rates, indicative of significant socioeconomic transformations. The poverty rate decreased from 18.2% in 2010 to 13.6% in 2021, marking a substantial reduction of nearly five percentage points over eleven years. This downward trend can be attributed to various government initiatives aimed at improving living standards, expanding social welfare programs, and diversifying the economy beyond oil dependency. The reduction in poverty also reflects broader demographic and economic shifts, including increased employment opportunities in non-oil sectors and enhanced access to education and healthcare services for disadvantaged populations. Despite these improvements, the Saudi government has maintained a policy of discouraging public discussion or complaints related to poverty, thereby limiting transparency and open discourse on the issue. This approach manifests in official restrictions on media coverage and public debate concerning socioeconomic disparities, effectively curtailing the visibility of poverty within the national narrative. The government’s stance aims to preserve social stability and protect the country’s international image by minimizing acknowledgment of internal economic challenges. Consequently, the lack of open dialogue contributes to a scarcity of reliable, publicly accessible data on poverty and inhibits civil society’s ability to advocate for vulnerable populations. The sensitivity surrounding poverty discourse in Saudi Arabia became evident in December 2011, shortly after the wave of Arab Spring uprisings swept across the Middle East and North Africa. During this period, the Saudi Interior Ministry detained reporter Feros Boqna along with two colleagues, Hussam al-Drewesh and Khaled al-Rasheed, holding them for nearly two weeks for questioning. Their detention followed the upload of a 10-minute YouTube video titled Mal3ob 3alena (translated as “We are being cheated”), which addressed issues of poverty and economic injustice within Saudi society. The video’s critical tone and exposure of socioeconomic grievances were perceived as a challenge to the official narrative, prompting swift government action to suppress the content and intimidate those involved. Mal3ob 3alena presented stark statistics that underscored the depth of economic hardship faced by many Saudis. It claimed that as of 2009, 22% of the Saudi population was considered poor, a figure significantly higher than official estimates. Additionally, the video highlighted housing insecurity by stating that 70% of Saudis did not own their homes, pointing to widespread difficulties in securing stable and affordable accommodation. These revelations brought attention to systemic issues such as income inequality, unemployment, and the inadequacy of social safety nets, which were often omitted from official discourse. The video’s impact lay in its ability to articulate popular frustrations and expose the lived realities of marginalized communities within the kingdom. Official statistics on poverty in Saudi Arabia remain elusive, as the government does not publicly release detailed poverty figures through United Nations channels or other international organizations. This absence of official data contributes to a significant gap in reliable, transparent information on the socioeconomic conditions of Saudi citizens. The lack of publicly available statistics complicates efforts by researchers, policymakers, and international observers to accurately assess the scale and nature of poverty within the country. It also hinders the formulation of targeted interventions and the monitoring of progress toward poverty alleviation goals. Due to the restrictive environment surrounding poverty research and discussion, many researchers and observers investigating poverty in Saudi Arabia choose to remain anonymous out of fear of government reprisal and potential arrest. The detention of individuals like Feros Boqna serves as a cautionary example of the risks associated with publicly addressing poverty-related issues. This climate of suppression creates a chilling effect on academic inquiry and journalistic investigation, limiting the flow of information and perpetuating the invisibility of marginalized populations. Consequently, the discourse on poverty in Saudi Arabia is characterized by a high degree of sensitivity and caution, reflecting broader patterns of state control over social and political narratives.

In 2017, homeownership among Saudi Arabian citizens reached 50%, reflecting a significant rise from the 30% ownership rate recorded in 2011. Despite this notable increase over a six-year period, the homeownership rate in Saudi Arabia remained considerably lower than the international average, which stood at approximately 70%. This disparity highlighted ongoing challenges within the Kingdom’s housing sector, where demand for affordable and accessible housing continued to outpace supply. The relatively low homeownership rate underscored structural issues in housing finance and availability, as well as broader economic and demographic pressures influencing the housing market. Back in 2011, analysts estimated that Saudi Arabia required the construction of approximately 500,000 new homes annually to accommodate rapid population growth and urbanization trends. This figure was based on demographic projections and the increasing number of households forming each year. However, by early 2014, the actual number of houses being built annually fell short of this target, with construction rates ranging between 300,000 and 400,000 units. The shortfall in new housing supply contributed to rising property prices and exacerbated the affordability crisis, as demand continued to outstrip the rate of new home completions. This gap between required and actual housing production highlighted inefficiencies within the construction sector and the broader real estate market. A critical component of housing finance in Saudi Arabia was the government’s Real Estate Development Fund (REDF), which played a dominant role by providing approximately 81% of all housing loans in the country. The REDF was established to facilitate homeownership by offering subsidized loans to Saudi citizens, thereby reducing financial barriers to purchasing homes. However, the fund faced significant operational challenges due to overwhelming demand, resulting in an extensive backlog. By the mid-2010s, the REDF had accumulated an 18-year waiting list for loan approvals, reflecting a severe bottleneck in housing finance availability. This prolonged waiting period not only delayed homeownership for many citizens but also underscored the need for reforms and additional financing mechanisms within the housing sector. The limitations of the REDF’s loan offerings further compounded the affordability issues. The maximum loan amount available through the fund was capped at 500,000 Saudi Riyals (SR), equivalent to roughly $133,000. This ceiling was set to maintain fiscal sustainability and manage risk exposure but proved insufficient given the prevailing market conditions. For instance, in 2012, the average price of a small free-standing home in Riyadh, the capital city, was approximately 1.23 million SR, or about $328,000. This price was more than double the maximum loan amount provided by the REDF, making it difficult for many prospective homebuyers to finance the full cost of a property through government loans alone. The disparity between loan limits and market prices highlighted a structural mismatch that hindered access to affordable housing finance. Recognizing these challenges, the Saudi government introduced new funding solutions in August 2018 aimed at expanding mortgage availability and improving access to housing finance. These initiatives were announced by Majed Al-Hogail, the Minister of Housing, who emphasized the government’s commitment to supporting both existing and new borrowers in achieving their housing goals. The reforms sought to diversify funding sources beyond the REDF, encourage private sector participation in mortgage lending, and develop more flexible financial products tailored to the needs of Saudi citizens. By broadening the range of mortgage options and increasing liquidity in the housing finance market, the government aimed to alleviate the long waiting times for loans and enhance overall housing affordability. One of the primary factors contributing to the high cost of housing in Saudi Arabia was the elevated price of land, particularly in urban centers such as Riyadh, Jeddah, and Dammam. Land scarcity and ownership patterns played a significant role in driving up prices. Nearly all urban land was owned by the Saudi elite, including members of the royal family and other wealthy individuals with substantial holdings. This concentration of land ownership limited the availability of affordable plots for residential development and created barriers for developers seeking to build new housing projects. The control exerted by elite landowners over prime urban land thus became a critical constraint on housing supply and affordability. The influence of the Saudi elite extended beyond ownership to active lobbying efforts aimed at securing favorable government policies regarding land distribution. These elites advocated for land “giveaways,” whereby the government would allocate land at reduced or no cost to certain individuals or entities. Such practices contributed to a significant increase in land prices, with values rising by approximately 50% between 2011 and 2013. This surge in land prices primarily benefited landowners who held their property for future development or resale, effectively incentivizing speculative behavior in the land market. The resultant escalation in land costs was subsequently passed on to homebuyers, further inflating housing prices and complicating affordability. To address the issue of “land banking,” a practice where landowners deliberately kept properties vacant to profit from anticipated price increases, the Minister of Housing proposed measures in 2013 to discourage this behavior. One such proposal involved imposing a tax on vacant properties located within city limits, aiming to incentivize landowners to develop or sell unused land rather than holding it idle. The introduction of a vacancy tax was intended to increase the supply of developable land, reduce speculative holding, and ultimately contribute to moderating land and housing prices. Despite the proposal’s potential to alleviate supply constraints, no concrete plans or implementation details for such a tax had been announced by the government as of the mid-2010s, leaving the issue unresolved and continuing to impact the housing market dynamics.

In 2018, the Saudi Arabian economy experienced a significant disruption in private-sector growth following the introduction of a 5% value-added tax (VAT). This fiscal policy measure, implemented as part of broader economic reforms aimed at diversifying government revenue away from oil dependence, effectively brought private-sector expansion to a halt. The imposition of VAT increased the cost of goods and services, which in turn dampened consumer spending and business investment across the kingdom. This fiscal adjustment coincided with other economic pressures, creating a challenging environment for private enterprises striving for growth. Consumer spending in 2018 was further constrained by sharp increases in the prices of essential utilities such as energy, electricity, and water. These price hikes were part of government efforts to rationalize subsidies and improve fiscal sustainability but resulted in reduced disposable income for households. The consequent decline in domestic demand had a ripple effect on various sectors, particularly retail and services, as consumers curtailed expenditure amid rising living costs. This contraction in consumer activity compounded the slowdown in private-sector growth, highlighting the sensitivity of the Saudi economy to changes in household consumption patterns. Simultaneously, the Saudi government introduced new levies targeting expatriate workers, which significantly altered the labor market dynamics within the kingdom. These levies increased the financial burden on employers who relied heavily on foreign labor, prompting a large-scale exodus of approximately 750,000 foreign workers. This mass departure not only disrupted businesses dependent on expatriate labor but also intensified labor shortages in certain industries. The policy was part of a broader Saudization initiative aimed at increasing employment opportunities for Saudi nationals, but its immediate impact was a contraction in the available workforce and operational challenges for private companies. In addition to levies on expatriates, small-business owners faced new regulatory requirements mandating the employment of Saudi nationals at wages higher than those paid to foreign workers. This policy increased labor costs for small enterprises, many of which operate on thin profit margins. The wage differential created financial strain, discouraging some businesses from expanding their workforce or investing in growth. While intended to promote national employment, these measures inadvertently raised operational expenses for small businesses, contributing to a more cautious approach toward hiring and investment within the private sector. Efforts to attract substantial direct foreign investment into Saudi Arabia encountered persistent obstacles during this period. Despite the kingdom’s strategic initiatives to diversify its economy and open up sectors to international investors, wealthy Saudi nationals exhibited reluctance to invest domestically. This hesitancy was largely attributed to concerns over government scrutiny and regulatory uncertainties, which created an environment perceived as risky for large-scale private investment. The lack of confidence among local investors compounded the difficulties in mobilizing capital for private-sector development, limiting the potential for economic diversification and innovation. On 11 May 2020, amid escalating fiscal pressures exacerbated by the global coronavirus pandemic and a steep decline in oil prices, the Saudi government announced a dramatic increase in the VAT rate from 5% to 15%. This tripling of the VAT was a critical component of austerity measures designed to address the kingdom’s financial crisis by boosting non-oil revenue. The timing of the VAT hike reflected the urgent need to shore up government finances as oil revenues, which historically accounted for a substantial share of the budget, plummeted due to reduced global demand and market instability caused by the pandemic. Alongside the VAT increase, the government implemented additional austerity measures targeting public expenditure. These included a reduction in the monthly allowance for state employees by approximately $266, a significant cut that directly affected household incomes for government workers. Furthermore, financial benefits for contractors were also curtailed, reflecting a broader effort to reduce government spending amid shrinking revenues. These measures collectively aimed to stabilize the fiscal situation but also placed additional burdens on public sector workers and businesses reliant on government contracts. In response to the global economic downturn and the collapse in fuel demand triggered by the coronavirus pandemic, Saudi Aramco, the state-owned oil company, substantially reduced production of its Arab Light grade crude oil destined for Asian markets. Although the precise volume of the production cut was not publicly disclosed, this strategic adjustment was part of a coordinated effort to balance supply and demand in a volatile market. The reduction in output underscored the severity of the pandemic’s impact on global energy consumption and reflected Saudi Arabia’s role in managing oil prices through production controls. In addition to scaling back production for Asian customers, Aramco also lowered oil prices for its buyers in the United States. This price reduction was a direct response to weakening fuel demand in the US, where economic activity had slowed considerably due to pandemic-related restrictions and reduced mobility. By adjusting prices downward, Aramco sought to maintain market share and support its customers during a period of unprecedented uncertainty. These pricing strategies highlighted the interconnectedness of global oil markets and the challenges faced by producers in adapting to rapidly changing economic conditions. The economic turbulence experienced during 2020 was further reflected in inflation dynamics within Saudi Arabia. According to data from the General Authority for Statistics, the inflation rate accelerated sharply to 6.2% in August 2020 compared to the same month in the previous year. This marked increase in the cost of living was influenced by several factors, including the VAT hike, rising prices for goods and services, and supply chain disruptions caused by the pandemic. The inflationary pressures eroded purchasing power and added to the economic challenges confronting households and businesses alike. The annual inflation rate exhibited a notable upward trajectory in the months preceding the VAT increase. Specifically, inflation rose from a relatively low 0.5% in June 2020 to 6.1% in July 2020, immediately before the VAT rate was raised from 5% to 15% on 1 July 2020. This rapid escalation signaled the significant impact of fiscal policy changes on price levels and underscored the sensitivity of the Saudi economy to tax adjustments. The sharp rise in inflation during this period highlighted the trade-offs inherent in implementing revenue-enhancing measures amid an economic downturn, as higher costs placed additional strain on consumers and the private sector.

Saudi Arabia operates two primary stock exchanges that serve as pivotal platforms for capital market activities within the kingdom. The first and most prominent is the Tadawul, officially known as the Saudi Stock Exchange, which functions as the main equity market where the majority of publicly traded companies are listed. Tadawul plays a critical role in the Saudi economy by facilitating the buying and selling of shares, bonds, and other securities, thereby enabling companies to raise capital and investors to participate in the kingdom’s economic growth. Alongside Tadawul, Saudi Arabia also operates The Saudi Parallel Market, commonly referred to as Nomu. Established to complement the main exchange, Nomu provides a more flexible regulatory environment aimed at smaller and emerging companies that may not meet the stringent listing requirements of Tadawul. This parallel market encourages entrepreneurship and innovation by offering an accessible platform for startups and growth-oriented enterprises to access public funding. The financial markets in Saudi Arabia, encompassing both the Tadawul and Nomu exchanges, are subject to regulatory oversight by the Capital Market Authority (CMA). The CMA is an independent public institution responsible for developing and regulating the capital markets to ensure transparency, fairness, and investor protection. It enforces a comprehensive legal framework that governs market operations, disclosure requirements, and corporate governance standards, thereby fostering confidence among domestic and international investors. The authority also plays an instrumental role in promoting market development initiatives, introducing new financial instruments, and enhancing the overall infrastructure of the Saudi capital markets. Through its regulatory vigilance, the CMA has contributed to the stability and integrity of Saudi Arabia’s financial ecosystem, aligning it with global best practices and facilitating the kingdom’s integration into the international financial community. The total market capitalization of companies listed on Saudi Arabia’s stock exchanges reflects the substantial scale and depth of the kingdom’s capital markets. As of the latest available data, the combined market capitalization of all listed companies in Saudi Arabia amounts to approximately $2.22 trillion. This valuation positions the Saudi stock market as one of the largest in the Middle East and North Africa (MENA) region, underscoring its significance as a regional financial hub. The sizeable market capitalization is indicative of the broad range of sectors represented on the exchanges, including energy, petrochemicals, banking, telecommunications, and consumer goods. It also highlights the growing investor interest and liquidity within the Saudi market, driven by ongoing economic diversification efforts and reforms aimed at enhancing private sector participation under the Vision 2030 framework. In 2019, Saudi Arabia garnered international recognition for its remarkable progress in improving business competitiveness. The International Institute for Management Development (IMD), a leading global business school known for its annual World Competitiveness Ranking, reported that Saudi Arabia achieved the largest improvement in business competitiveness among all countries worldwide during that year. This notable advancement was attributed to a series of strategic reforms and policy measures implemented by the Saudi government to create a more conducive environment for business operations. These reforms included regulatory simplifications, enhancements in infrastructure, improvements in labor market flexibility, and initiatives to attract foreign direct investment. The IMD’s assessment underscored the kingdom’s commitment to transforming its economic landscape and fostering a more dynamic and competitive business climate. As a direct consequence of these improvements, Saudi Arabia’s position in the global business competitiveness rankings experienced a significant rise. The country climbed 13 places in the IMD’s 2019 rankings, reaching the 26th position worldwide. This upward movement reflected the positive impact of the kingdom’s reform agenda on various competitiveness factors such as economic performance, government efficiency, business efficiency, and infrastructure quality. The improved ranking not only enhanced Saudi Arabia’s reputation as an attractive destination for investment but also signaled the effectiveness of its Vision 2030 initiatives aimed at reducing dependence on oil revenues and diversifying the economy. The progress in competitiveness served to bolster investor confidence and encouraged greater participation in the kingdom’s expanding financial markets, thereby reinforcing Saudi Arabia’s role as a key player in the global economic arena.

According to the World Bank Group’s “Doing Business” 2020 report, Saudi Arabia demonstrated one of the most notable improvements in the ease of doing business globally, advancing 30 places to achieve a ranking of 62nd compared to the previous year. This significant leap reflected the kingdom’s concerted efforts to reform its business environment and regulatory framework, making it more conducive to entrepreneurship and investment. The improvement was particularly striking given the context of Saudi Arabia’s prior trajectory in the ease of doing business rankings. Between 2013 and 2018, the country experienced a steady decline in its overall ranking, dropping from 22nd place in 2013 to as low as 92nd place in 2018. This downward trend highlighted challenges in regulatory processes and business operations that the government sought to address through comprehensive reforms. In 2019, the World Bank identified that Saudi Arabia had implemented a series of reforms across eight critical areas of business operations, which collectively contributed to the improved ranking. These areas included starting a business, obtaining construction permits, getting electricity, accessing credit, protecting minority investors, trading across borders, enforcing contracts, and resolving insolvency. By streamlining procedures and reducing bureaucratic hurdles in these domains, Saudi Arabia enhanced the overall business climate. For instance, reforms in starting a business involved simplifying registration processes and reducing the time and cost required to establish a new company. Similarly, improvements in obtaining construction permits and getting electricity addressed long-standing infrastructural and administrative bottlenecks that had previously hindered business development. Access to credit was facilitated through enhanced legal rights and credit information systems, enabling businesses to secure financing more readily. Protecting minority investors was strengthened by improving transparency and governance standards, thereby increasing investor confidence. Trade facilitation measures reduced delays and costs associated with cross-border transactions, supporting Saudi Arabia’s ambitions to become a regional trade hub. Enhancements in contract enforcement and insolvency resolution provided clearer legal frameworks and faster dispute resolution mechanisms, which are essential for maintaining commercial certainty and encouraging investment. Saudi Arabian companies have historically played a dominant role in the regional economy, a fact underscored by their presence in the “MEED 100” list, which ranks the largest publicly quoted companies in the Middle East by market capitalization. In 2009, companies listed on the Tadawul stock exchange accounted for 29 out of the 100 largest firms in the region, reflecting the kingdom’s economic prominence and the strength of its corporate sector. This dominance indicated not only the size but also the relative stability and growth potential of Saudi-listed companies within the broader Middle Eastern market. Over the subsequent years, the composition of the MEED 100 list evolved, with some companies dropping out due to various market dynamics. Of the 20 companies that fell off the list in the year prior to the latest data, only three were listed on the Saudi stock exchange. This low attrition rate among Saudi-listed firms suggested a robust market stability and resilience compared to peers in other countries, reinforcing the kingdom’s position as a key economic player in the region. Foreign investment policies in Saudi Arabia have undergone substantial liberalization to attract international capital and expertise. Foreign investors are permitted to wholly own limited liability companies in the majority of industries within the kingdom, subject to compliance with regulatory requirements. This policy marked a departure from previous restrictions that often required local partners or limited foreign ownership stakes, thereby enhancing the attractiveness of Saudi Arabia as an investment destination. To operate businesses in the kingdom, non-Saudi nationals must obtain a foreign capital investment license from the Saudi Arabian General Investment Authority (SAGIA), the government body responsible for overseeing and facilitating foreign investment. This licensing process ensures that foreign investors meet the necessary legal and regulatory standards while aligning with national economic objectives. Reflecting the impact of these reforms and the broader economic diversification strategy under the Saudi Vision 2030 initiative, the issuance of foreign investor licenses witnessed a marked increase. In the second quarter of 2019 alone, Saudi Arabia issued a total of 291 foreign investor licenses, signaling a growing confidence among international investors in the kingdom’s business environment. This surge in foreign investment licenses was indicative of the government’s success in promoting Saudi Arabia as a competitive and accessible market for global businesses. To further facilitate foreign investment, the process for obtaining a foreign investor license was streamlined significantly. The requirements were reduced to only two documents, and the entire licensing procedure was designed to be completed within three hours. This expedited process eliminated many of the bureaucratic delays that had previously deterred foreign investors, thereby enhancing the kingdom’s appeal as a destination for international capital and contributing to the ongoing transformation of its economy.

Saudi Aramco, officially known as the Saudi Arabian Oil Company, serves as the national oil, petroleum, and natural gas enterprise of Saudi Arabia, with its corporate headquarters located in Dhahran. Established as a state-owned entity, it has grown to become one of the largest and most influential companies in the global energy sector. The company’s operations encompass the exploration, production, refining, distribution, and marketing of hydrocarbons, playing a pivotal role in Saudi Arabia’s economy and the worldwide oil market. On 10 December 2019, Saudi Aramco made a historic move by listing its shares for public trading, marking one of the largest initial public offerings (IPOs) in history. This public listing was conducted on the Tadawul, the Saudi Stock Exchange, and it significantly increased the company’s transparency and access to international capital markets. By 12 December 2019, just two days after the IPO, Saudi Aramco’s market valuation reached an unprecedented US$2 trillion, underscoring its immense scale and the global importance of its oil reserves and production capabilities. This valuation positioned Saudi Aramco as the most valuable publicly traded company worldwide at that time. The company possesses the second largest proven crude oil reserves globally, with Saudi Aramco claiming reserves exceeding 260 billion barrels, equivalent to approximately 41 billion cubic meters (4.1×10¹⁰ m³). These vast reserves place Saudi Aramco at the forefront of the global oil industry, enabling it to sustain long-term production and supply commitments. The company’s ability to maintain and develop these reserves has been a critical factor in Saudi Arabia’s influence over global oil prices and energy security. In addition to its substantial reserves, Saudi Aramco holds the distinction of having the largest daily oil production capacity worldwide, consistently producing millions of barrels per day to meet international demand. Integral to its operations is the Master Gas System, which Saudi Aramco operates and which is recognized as the world’s largest single hydrocarbon network. This extensive infrastructure network transports natural gas and associated liquids across Saudi Arabia, facilitating the efficient distribution of energy resources to domestic industries and export terminals. The Master Gas System supports the company’s integrated energy operations, linking upstream production fields with downstream processing and export facilities, thereby enhancing operational efficiency and energy security within the kingdom. Saudi Aramco’s annual oil production is reported to amount to approximately 3.479 billion barrels, equivalent to 553.1 million cubic meters (553,100,000 m³). This volume reflects the company’s significant role in fulfilling global energy demand and its capacity to scale production in response to market conditions. Managing such a vast output requires sophisticated logistical and operational capabilities, which Saudi Aramco has developed over decades of experience in the oil industry. The company oversees more than 100 oil and gas fields within Saudi Arabia, demonstrating its extensive control over the country’s hydrocarbon resources. Among these, Saudi Aramco manages natural gas reserves totaling 284.8 trillion standard cubic feet (scf), which contribute substantially to the kingdom’s energy mix and industrial feedstock requirements. These gas reserves support domestic power generation, petrochemical production, and export initiatives, complementing the company’s oil production activities. Among the oil fields under Saudi Aramco’s management, the Ghawar Field stands out as the world’s largest oil field. Discovered in 1948, Ghawar has been a cornerstone of Saudi Arabia’s oil production for decades, with its vast reserves and high-quality crude oil contributing significantly to the company’s output. In addition to Ghawar, the Shaybah Field is also among the world’s largest oil fields, located in the Rub’ al Khali desert. Shaybah’s development has expanded Saudi Aramco’s production capacity and demonstrated the company’s ability to exploit challenging environments to access valuable hydrocarbon resources. In response to the economic challenges posed by the global coronavirus pandemic, Saudi Aramco announced on 16 November 2020 its intention to engage banks to issue dollar-denominated bonds. This strategic move aimed to strengthen the company’s financial position following a sharp decline in global crude oil demand caused by the pandemic’s impact on travel, industry, and economic activity worldwide. The bond issuance was designed to provide Saudi Aramco with additional liquidity and financial flexibility during a period of significant market uncertainty. The bond offering was structured as a multi-tranche deal, featuring maturities that ranged from 3 to 50 years. This approach allowed the company to tailor its debt profile in accordance with prevailing market conditions and investor appetite, spreading repayment obligations over an extended period while optimizing borrowing costs. The flexibility inherent in the multi-tranche structure enabled Saudi Aramco to address both short-term funding needs and long-term capital requirements. To execute the bond transaction, Saudi Aramco enlisted a consortium of leading global financial institutions. The primary banks appointed for this issuance included Citi Bank, Goldman Sachs International, HSBC, JP Morgan, Morgan Stanley, and NCB Capital. These institutions brought extensive expertise in international capital markets and debt issuance, facilitating the successful placement of the bonds among a diverse investor base. In addition to the primary banks, several other prominent financial institutions participated in the bond issuance process. These included BNP Paribas, BOC International, BofA Securities, Credit Agricole, First Abu Dhabi Bank, Mizuho, Mitsubishi UFJ Financial Group (MUFG), SMBC Nikko, and Societe Generale. The involvement of these additional banks helped broaden the distribution network for the bonds, enhancing market reach and investor confidence in the offering. Saudi Aramco’s financial performance demonstrated resilience and recovery in the months following the bond issuance. In the second quarter of 2021, the company reported a net income of 95.5 billion Saudi riyals, equivalent to approximately $25.5 billion. This figure represented Saudi Aramco’s highest quarterly net income since 2018, reflecting a rebound in oil prices and demand as global economic activity resumed following the initial disruptions caused by the pandemic. The strong financial results underscored the company’s robust operational capabilities and its critical role in the global energy landscape.

The Saudi Arabian Basic Industries Corporation (SABIC) was established in 1976 by a royal decree with the strategic objective of developing and producing chemicals, polymers, and fertilizers within the Kingdom of Saudi Arabia. This foundational move was part of a broader national initiative to diversify the economy beyond oil exports and to foster industrial growth by leveraging the country’s abundant hydrocarbon resources. SABIC’s mandate focused on transforming raw materials such as natural gas and crude oil into value-added products that could serve both domestic and international markets, thereby enhancing Saudi Arabia’s industrial capabilities and economic resilience. By 2008, SABIC had achieved significant milestones in the global petrochemical industry, emerging as Asia’s largest publicly listed non-oil company by market capitalization. This distinction underscored the company’s substantial market value and investor confidence, reflecting its dominant position outside the oil sector. Furthermore, SABIC was recognized as the most profitable entity within this category, highlighting its operational efficiency and strong financial performance amid competitive global markets. The company’s profitability was driven by its diversified product portfolio, strategic investments, and integration across the petrochemical value chain. In the same year, SABIC was ranked as the world’s fourth-largest petrochemical company, a testament to its expansive production capacity and global reach. This ranking placed SABIC among the elite tier of multinational corporations specializing in the manufacture of chemicals and plastics, positioning it as a critical player in supplying raw materials essential to numerous industries worldwide. The company’s scale and technological capabilities enabled it to compete effectively with other industry giants, contributing significantly to the global supply of petrochemical products. SABIC’s prominence extended to specific product segments, where it held leading positions on the international stage. It was the second-largest global producer of ethylene glycol and methanol in 2008, both of which are vital chemical intermediates used in the manufacture of antifreeze, polyester fibers, resins, and various industrial solvents. This leadership in ethylene glycol and methanol production underscored SABIC’s advanced chemical synthesis technologies and its ability to meet growing global demand for these essential compounds. Additionally, SABIC was ranked as the third-largest producer of polyethylene worldwide in 2008. Polyethylene, a versatile plastic polymer used extensively in packaging, containers, and household goods, represented a significant portion of the company’s product lineup. SABIC’s capacity to produce polyethylene at such a scale reflected its investment in state-of-the-art polymerization facilities and its strategic focus on high-volume, high-demand polymer products. The company also held the position of the fourth-largest producer globally of polypropylene and polyolefin in 2008. Polypropylene and polyolefins are critical materials in automotive parts, textiles, packaging, and consumer products, and SABIC’s substantial output in these categories demonstrated its comprehensive product range and ability to supply diverse industrial sectors. This ranking highlighted SABIC’s role as a key supplier of polyolefin resins, contributing to the global plastics market and supporting downstream manufacturing industries. SABIC’s expansive operations and financial strength were further reflected in its placement on the Fortune Global 500 list for the year 2009, where it was ranked 186th among the world’s largest corporations. This ranking considered various factors including revenue, profits, assets, and market influence, situating SABIC among the most significant multinational enterprises. The company’s inclusion on this prestigious list illustrated its global economic impact and its stature as a major industrial conglomerate. Prior to this, in 2005, both Standard & Poor’s and Fitch Ratings had recognized SABIC as the world’s largest producer of polymers, underscoring its dominant position in the plastics and chemical sectors. Additionally, the company was identified as the largest steel producer in the Persian Gulf region, reflecting its diversification beyond petrochemicals into steel manufacturing. This dual recognition highlighted SABIC’s multifaceted industrial capabilities and its strategic importance to the regional economy. Both Standard & Poor’s and Fitch Ratings assigned SABIC a corporate credit rating of “A,” indicating a strong capacity to meet its financial commitments and a low risk of default. This high credit rating enhanced SABIC’s ability to access capital markets at favorable terms, supporting its expansion and investment plans. The rating also reflected the company’s robust financial management, operational stability, and the backing of the Saudi government. According to the Fortune 500 rankings in 2008, SABIC reported revenues of $40.2 billion, a figure that demonstrated the company’s extensive sales and operational scale. This substantial revenue base was generated through the sale of a broad array of chemical products, polymers, fertilizers, and steel, serving a wide range of industrial customers globally. The revenue figure highlighted SABIC’s role as a major economic contributor within Saudi Arabia and a significant player in international markets. In the same year, SABIC recorded profits of $5.8 billion, reflecting its efficient cost management, strong market demand, and favorable pricing conditions. This level of profitability positioned SABIC among the most financially successful companies in the petrochemical sector. The company’s profitability was driven by its integrated business model, economies of scale, and strategic positioning in high-growth markets. SABIC’s total assets were valued at $72.4 billion in 2008, indicating the extensive capital base underpinning its operations. These assets included production facilities, research and development centers, distribution networks, and investments in subsidiaries and joint ventures. The substantial asset base provided SABIC with the capacity to sustain large-scale production, invest in technological innovation, and expand its global footprint. Collectively, these financial and operational metrics underscored SABIC’s status as a leading industrial conglomerate with significant influence on both the Saudi Arabian economy and the global petrochemical industry.

Ma’aden was established as a Saudi joint stock company on 23 March 1997 with the primary objective of facilitating the development of Saudi Arabia’s mineral resources. Its creation marked a significant step in the Kingdom’s efforts to diversify its economy beyond oil by tapping into the vast mineral wealth within its borders. The company was envisioned as a catalyst for the mining sector, tasked with spearheading exploration, development, and production activities that would contribute to national economic growth. By structuring Ma’aden as a joint stock company, the Saudi government aimed to combine public oversight with commercial efficiency, enabling the enterprise to operate competitively in both domestic and international markets. The company’s core activities have historically centered on its active gold business, which has grown substantially since its inception. Ma’aden operates five gold mines, each contributing to its status as a leading gold producer in the region. These mines include Mahd Ad Dahab, Al Hajar, Sukhaybarat, Bulghah, and Al Amar, all of which are located in mineral-rich areas of Saudi Arabia. Mahd Ad Dahab, often referred to as the “Cradle of Gold,” is one of the oldest and most productive mines, with a history of gold extraction dating back thousands of years. The other mines—Al Hajar, Sukhaybarat, Bulghah, and Al Amar—have been developed and expanded through modern mining techniques to increase output and efficiency. Together, these operations have positioned Ma’aden as a key player in the global gold market, while also supporting local employment and infrastructure development in mining regions. In addition to its established gold mining operations, Ma’aden has been actively diversifying its portfolio by developing projects in other mineral sectors such as phosphates and aluminium. The company’s phosphate ventures focus on the extraction and processing of phosphate rock, a critical raw material for the production of fertilizers, which supports both domestic agriculture and export markets. Ma’aden’s involvement in the aluminium sector includes the development of integrated projects that encompass bauxite mining, alumina refining, and aluminium smelting. These projects are designed to create a vertically integrated aluminium industry within Saudi Arabia, reducing dependence on imports and fostering industrial growth. Moreover, Ma’aden has explored opportunities in other mineral resources, reflecting a strategic commitment to broadening its operational base and enhancing the Kingdom’s mineral resource value chain. Since its establishment, Ma’aden has maintained close collaboration with the Ministry of Petroleum and Mineral Resources, the Saudi government, and local legislators to develop a comprehensive regulatory framework governing the mining industry. This cooperation has been essential in creating policies that encourage investment, ensure environmental sustainability, and promote responsible mining practices. The regulatory framework includes legislation on mineral rights, safety standards, environmental protection, and community engagement, all aimed at fostering a stable and transparent mining sector. By working alongside government entities, Ma’aden has helped to shape the legal and institutional environment necessary for the sustainable development of Saudi Arabia’s mineral resources. This partnership has also facilitated the alignment of Ma’aden’s operations with national economic goals, including diversification under the broader Saudi Vision 2030 initiative.