Saudi Arabia: Measures of Transition from a Rentier State
Abstract
This chapter assesses the extent to which Saudi Arabia's long-term economic development strategy is meeting its objectives. Early on after the 1973-74 oil boom, the government decided that a high proportion of the country's oil revenues should be spent in a manner that would encourage private sector investment and production. Part of a larger political/military strategy, the economic component was to diversify the economy away from oil to the extent that self-sustaining growth could occur in the major non-oil sectors of the economy. Clearly, the goal is the creation of an economy capable of functioning independently of developments in the oil sector. This strategy was intended to provide more stability to the country's pattern of economic growth and development, and while several oil-producing countries express this desire, the Kingdom's planners put together a coherent investment strategy focused on achieving this result. At least publicly, the strategy has remained in place since the early 1970s. While the goals of this strategy seem straightforward, arriving at an objective assessment of progress made to date is extremely difficult. If one could show that, over time, a linkage from private expenditures to private output was growing stronger than that of public expenditures to private output, then one might argue that the economy had evolved a bit, but that private expenditures themselves could not be sustained without a steady infusion of government funds. The methods by which one defines and measures oil independence are at the crux of assessing the success of the country's development accomplishments. The first sections of the chapter provide a brief overview of the macro-economy. Trends in output and expenditure are examined, and relevant patterns are identified. The second section develops an operational test for measuring the extent to which the private sector is replacing government spending as the prime mover of the non-oil sector.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 2001
- Accession Number
- ADA484927
Entities
People
- Robert E. Looney
Organizations
- Naval Postgraduate School