Petroleum Based Development and the Private Sector: A Critique of the Saudi Arabian Industrialization Strategy
Abstract
In almost every country, industry is the glamor sector of economic development. People look to industrial development to provide much needed employment, to generate higher individual and national incomes, to relieve balance of payments constraints through import substitution, to open up markets for primary products such as those from the mining and fishing sectors, to give the country greater economic independence, to generate new tax revenues, and to furnish an important source of national pride. By and large, these hoped for benefits of industrialization are desirable and realistic--provided a country makes sensible choices. The problem facing Saudi Arabia is well known. The kingdom has to invest--its current oil revenues to develop a viable economic structure for the day when its oil will have been depleted. Industrialization is one apparently attractive strategy open to the government--but this is an option which needs careful analysis. First, industrialization does not inevitably lead to sustainable, long term growth. Based on the Iranian case, this appears to be particularly true if the process is largely initiated by expatriate companies and individuals with no permanent commitment to the welfare of the country. Industry is of no use if it forms a symbolically modern sector of the economy without developing ever-expanding linkages with the indigenous economy and culture. Second, development economists often praise industrialization for its employment-generating effects. Yet, this should not be a high priority for the country given its small population. In the long run, non-oil related jobs will obviously be needed. In the short run, though, there may be no point in creating jobs which can only be filled by foreigners.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 1985
- Accession Number
- ADA529255
Entities
People
- Robert E. Looney
Organizations
- Naval Postgraduate School