Description
Economic Interdependence and Saudi Arabia
I will start with a bit of history, the world’s biggest petroleum reserve was discovered when an
American-owned oil well in Dhahran, Saudi Arabia, dug into it on March 3, 1938. Saudi Arabia,
the Middle East, and the world’s political, human, and physical geography were all drastically
altered by the finding. Saudi Arabians were primarily nomads prior to the discovery. The tourist
industry, which derived from devout Muslims traveling to Mecca, was the backbone of the
nation’s economy. The demographics of the kingdom were also altered by the discovery of oil.
Saudi Arabia is home to millions of international workers who come from the Middle East,
Ethiopia, India, Pakistan, and the United States.
The economy of Saudi Arabia has traditionally been heavily dependent on oil exports, which has
rendered the nation particularly susceptible to fluctuations in global markets and geopolitical
developments. Recognizing the necessity for economic diversification, the kingdom has sought
to diminish its reliance on oil. This shift has fostered increased trade relations with various
countries, thereby creating opportunities for Saudi enterprises to penetrate new markets and
broaden their operations.
Furthermore, the kingdom’s advantageous geographic position and economic potential have
drawn considerable foreign investment. Nonetheless, challenges persist, as the dependence on
oil exports exposes the economy to the volatility of global oil prices; a downturn in these prices
can significantly affect the nation’s economy, resulting in decreased government revenue, rising
unemployment, and potential social unrest. Additionally, the kingdom’s economic advancement
has relied heavily on foreign technology, which has made it vulnerable to disruptions in supply
chains and risks of intellectual property theft.
This raises the question of what measures Saudi Arabia is undertaking to address these
challenges and diversify its economy. To illustrate, two notable initiatives are presented: first,
Vision 2030, a comprehensive long-term plan aimed at transforming the kingdom into a global
investment hub and a center for innovation; second, the economic reforms that Saudi Arabia
has enacted, which include privatization, deregulation, and the liberalization of its labor market.
So far, we are living through the time of which Saudi Arabia is taking serious steps towrds
international cooperation. The measure of implementing globalization in Saudi Arabia is notable
where services, as an example, is exchanged from and within and to Saudi Arabia.
References
Oil discovered in Saudi Arabia. (n.d.).
Raid, M., Ahmad, N., Bagadeem, S. A., Alzyadat, J., & Alhawal, H. (2024). The non-oil
institutional sectors and economic growth in Saudi Arabia. Cogent Economics &
Finance, 12(1).
Saudi Arabia – United States Department of State. (2023, December 7). United States
Department of State.
2C%20create
Saudi Arabia confronts its oil dependence – Kleinman Center for Energy Policy. (2023, November
21). Kleinman Center for Energy Policy.
0to%20some%20extent
Saudi Arabia to grow at fastest pace in a decade. (2022, August 9).
IMF.
20just%20three%20minutes)%2C
Module 1 – What do you know about Globalization?
Saudi Arabia’s economy has been significantly impacted by globalization, which has led to a
greater degree of economic interdependence with other countries. Saudi Arabia, a significant oil
exporter, has benefited from the increased demand for energy resources around the world,
solidifying its position in the global economy. The kingdom’s economy has been bolstered by the
inflow of foreign capital and its enhanced access to global markets, positioning it as a leader in
the global energy sector. Globalization has also made it possible for Saudi Arabia to draw in
international capital, diversify its economy, and import cutting-edge technology that support its
continued growth (Saudi Vision 2030 Document, 2017).
Economic interconnectedness is not without risk, though. Due to its continued reliance on oil
earnings, Saudi Arabia may experience severe economic volatility as a result of changes in the
price of the commodity globally (Saudi Arabia Oil & Gas Report, 2021). Geopolitical upheavals
and the global switch to renewable energy sources exacerbate this reliance. Even with programs
like Vision 2030 aimed at diversifying the economy, the monarchy is still susceptible to outside
economic shocks. Even while it has a positive effect on the world stage, this economic
interdependence calls for strong risk management and long-term stability plans.
Saudi Vision 2030 and International Competitiveness
Saudi Vision 2030, which lays out a new economic path centered on modernization and
diversification, is essential to raising the kingdom’s standing internationally. The majority of
Saudi Arabia’s national income has historically come from oil exports, which have a significant
impact on the country’s economy. But because of this reliance, the monarchy is now more
susceptible to changes in the price of oil globally and in the demands for energy. Vision 2030
(Saudi Vision 2030 Document, 2017) tackles this issue head-on by placing a strong emphasis on
the growth of non-oil industries like tourism, technology, entertainment, and renewable energy.
Saudi Arabia is in a better position to manage the volatility of the world energy market and
maintain long-term economic stability as a result of its decreased reliance on oil.
The globalization process is closely linked to the project as well. Through the promotion of a
more hospitable regulatory environment and the improvement of infrastructure to meet
international standards, Saudi Vision 2030 seeks to draw foreign direct investment (FDI). With
its investments in many industries demonstrating the kingdom’s commitment to building a
strong and diversified economy, the Public Investment Fund (PIF) has emerged as a crucial
instrument in this respect. Particularly the entertainment and tourist industries have drawn a lot
of attention, and this strategy heavily relies on large-scale initiatives like NEOM, a future
metropolis designed to spur innovation. Saudi Arabia aims to modernize its economy and
effectively participate in the global market by generating these opportunities (Saudi Arabia Oil &
Gas Report, 2021).
In line with the tenets of globalization, Vision 2030 also aims to establish Saudi Arabia as a hub
for international trade, investment, and innovation. Through the reduction of regulatory
barriers and enhancement of business facilitation, the monarchy is extending its invitation for
global partnerships and collaborations. This emphasis on fostering a climate that is businessfriendly draws in global companies and promotes capital flows, technology adoption, and
knowledge transfer—all of which can lead to additional economic growth. Saudi Arabia is
strengthening its position internationally and moving closer to being a significant hub for
international trade by taking use of its advantageous location at the intersection of Europe, Asia,
and Africa.
References
Altman, S. A., & Bastian, P. (2021). The state of globalization in 2021. Harvard Business Review
Digital Articles, 1-9. Retrieved
from
t-live
Saudi Arabia Oil & Gas Report. (Q1 2021). Fitch Solutions Country Industry Reports, 1-84.
Saudi Vision 2030 Document. (2017). Kingdom of Saudi Arabia. Retrieved
from
I will start with a bit of history, the world’s biggest petroleum reserve was discovered when an
American-owned oil well in Dhahran, Saudi Arabia, dug into it on March 3, 1938. Saudi Arabia,
the Middle East, and the world’s political, human, and physical geography were all drastically
altered by the finding. Saudi Arabians were primarily nomads prior to the discovery. The tourist
industry, which derived from devout Muslims traveling to Mecca, was the backbone of the
nation’s economy. The demographics of the kingdom were also altered by the discovery of oil.
Saudi Arabia is home to millions of international workers who come from the Middle East,
Ethiopia, India, Pakistan, and the United States.
The economy of Saudi Arabia has traditionally been heavily dependent on oil exports, which has
rendered the nation particularly susceptible to fluctuations in global markets and geopolitical
developments. Recognizing the necessity for economic diversification, the kingdom has sought
to diminish its reliance on oil. This shift has fostered increased trade relations with various
countries, thereby creating opportunities for Saudi enterprises to penetrate new markets and
broaden their operations.
Furthermore, the kingdom’s advantageous geographic position and economic potential have
drawn considerable foreign investment. Nonetheless, challenges persist, as the dependence on
oil exports exposes the economy to the volatility of global oil prices; a downturn in these prices
can significantly affect the nation’s economy, resulting in decreased government revenue, rising
unemployment, and potential social unrest. Additionally, the kingdom’s economic advancement
has relied heavily on foreign technology, which has made it vulnerable to disruptions in supply
chains and risks of intellectual property theft.
This raises the question of what measures Saudi Arabia is undertaking to address these
challenges and diversify its economy. To illustrate, two notable initiatives are presented: first,
Vision 2030, a comprehensive long-term plan aimed at transforming the kingdom into a global
investment hub and a center for innovation; second, the economic reforms that Saudi Arabia
has enacted, which include privatization, deregulation, and the liberalization of its labor market.
So far, we are living through the time of which Saudi Arabia is taking serious steps towrds
international cooperation. The measure of implementing globalization in Saudi Arabia is notable
where services, as an example, is exchanged from and within and to Saudi Arabia.
References
Oil discovered in Saudi Arabia. (n.d.).
Raid, M., Ahmad, N., Bagadeem, S. A., Alzyadat, J., & Alhawal, H. (2024). The non-oil
institutional sectors and economic growth in Saudi Arabia. Cogent Economics &
Finance, 12(1).
Saudi Arabia – United States Department of State. (2023, December 7). United States
Department of State.
2C%20create
Saudi Arabia confronts its oil dependence – Kleinman Center for Energy Policy. (2023, November
21). Kleinman Center for Energy Policy.
0to%20some%20extent
Saudi Arabia to grow at fastest pace in a decade. (2022, August 9).
IMF.
20just%20three%20minutes)%2C
Module 1 – What do you know about Globalization?
Saudi Arabia’s economy has been significantly impacted by globalization, which has led to a
greater degree of economic interdependence with other countries. Saudi Arabia, a significant oil
exporter, has benefited from the increased demand for energy resources around the world,
solidifying its position in the global economy. The kingdom’s economy has been bolstered by the
inflow of foreign capital and its enhanced access to global markets, positioning it as a leader in
the global energy sector. Globalization has also made it possible for Saudi Arabia to draw in
international capital, diversify its economy, and import cutting-edge technology that support its
continued growth (Saudi Vision 2030 Document, 2017).
Economic interconnectedness is not without risk, though. Due to its continued reliance on oil
earnings, Saudi Arabia may experience severe economic volatility as a result of changes in the
price of the commodity globally (Saudi Arabia Oil & Gas Report, 2021). Geopolitical upheavals
and the global switch to renewable energy sources exacerbate this reliance. Even with programs
like Vision 2030 aimed at diversifying the economy, the monarchy is still susceptible to outside
economic shocks. Even while it has a positive effect on the world stage, this economic
interdependence calls for strong risk management and long-term stability plans.
Saudi Vision 2030 and International Competitiveness
Saudi Vision 2030, which lays out a new economic path centered on modernization and
diversification, is essential to raising the kingdom’s standing internationally. The majority of
Saudi Arabia’s national income has historically come from oil exports, which have a significant
impact on the country’s economy. But because of this reliance, the monarchy is now more
susceptible to changes in the price of oil globally and in the demands for energy. Vision 2030
(Saudi Vision 2030 Document, 2017) tackles this issue head-on by placing a strong emphasis on
the growth of non-oil industries like tourism, technology, entertainment, and renewable energy.
Saudi Arabia is in a better position to manage the volatility of the world energy market and
maintain long-term economic stability as a result of its decreased reliance on oil.
The globalization process is closely linked to the project as well. Through the promotion of a
more hospitable regulatory environment and the improvement of infrastructure to meet
international standards, Saudi Vision 2030 seeks to draw foreign direct investment (FDI). With
its investments in many industries demonstrating the kingdom’s commitment to building a
strong and diversified economy, the Public Investment Fund (PIF) has emerged as a crucial
instrument in this respect. Particularly the entertainment and tourist industries have drawn a lot
of attention, and this strategy heavily relies on large-scale initiatives like NEOM, a future
metropolis designed to spur innovation. Saudi Arabia aims to modernize its economy and
effectively participate in the global market by generating these opportunities (Saudi Arabia Oil &
Gas Report, 2021).
In line with the tenets of globalization, Vision 2030 also aims to establish Saudi Arabia as a hub
for international trade, investment, and innovation. Through the reduction of regulatory
barriers and enhancement of business facilitation, the monarchy is extending its invitation for
global partnerships and collaborations. This emphasis on fostering a climate that is businessfriendly draws in global companies and promotes capital flows, technology adoption, and
knowledge transfer—all of which can lead to additional economic growth. Saudi Arabia is
strengthening its position internationally and moving closer to being a significant hub for
international trade by taking use of its advantageous location at the intersection of Europe, Asia,
and Africa.
References
Altman, S. A., & Bastian, P. (2021). The state of globalization in 2021. Harvard Business Review
Digital Articles, 1-9. Retrieved
from
t-live
Saudi Arabia Oil & Gas Report. (Q1 2021). Fitch Solutions Country Industry Reports, 1-84.
Saudi Vision 2030 Document. (2017). Kingdom of Saudi Arabia. Retrieved
from
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