Saudi Arabian Economics Essay, Research Paper
Chapter 4 of the Saudi Arabian Constitution (Articles 14-22) forms the general outline of the Saudi Arabian economy and its policies regarding that economy. A few of the ideas found in the constitution include; laws will be set up to govern every aspect of the economy; money is sacrosanct ; and everyone has the right to own property, and that right will be protected by the government. Many aspects of Saudi economics, including tourism, exports, and business allow for it to have a solid, and obviously well structured and outlines economic system.
A key element in the economical system of Saudi Arabia is exports. It is an oil-based economy with strong government controls over major economic activities. Saudi Arabia has the largest amount of petroleum in the world, 26% of the proven total in fact (http://www.saudia-online.com). In addition to this, Saudi Arabia ranks as the largest exporter of petroleum in the world. It also plays a leading role in the Organization of the Petroleum Exporting Countries, or OPEC for short. Other members of OPEN include Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, the United Arab Emirates and Venezuela. The petroleum aspect of Saudi Arabia s economy accounts for roughly 75% of budget revenues, 40% of GDP, and 90% of export earnings (http://www.saudia-online.com). About 35% of GDP comes from the private area of the Saudi economic cycle. Roughly 4 million foreign workers play an important role in the Saudi economy, for example, in the oil and service areas. Saudi Arabia was a key player in the successful efforts of OPEC and other oil producing countries to raise the price of oil in 1999 to its highest level since the Gulf War by reducing production (http://www.sauda-online.com). Although oil prices are expected to remain relatively high in 2000, Riyadh (Saudi Arabia s capital) expects to have a $7.5 billion budget deficit in part because of increased spending for education and other social problems.
In 1999, the Saudi Arabian government announced plans to start to turn the electricity companies into private ones. This came after the ongoing Saudi governmental pursuit of convincing the telecommunications market to become more private. The government is expected to continue calling for private sector growth to lessen the kingdom’s dependence on oil and increase employment opportunities for the swelling Saudi population. The Saudi government s main goal is to increase exports other than oil, specifically cement, steel rolling, construction, fertilizer, and plastics. At the current rate it s going, I personally believe that within the next 15 or so years, the Saudi economy will not depend nearly as much on oil as its main source of income as it does now. I believe it will remain the biggest exporter of oil in the world, but it s technology exports will most likely increase.
The unit of currency in Saudi Arabia is the riyal. There are quite a few nations with the riyal as their form of currency; therefore its technical term is the Saudi riyal. 1 Saudi riyal is equal to 100 halalah. Since 1986, the fixed exchange rate for the Saudi riyal has been 3.7450 Saudi riyals to 1 American dollar (http://www.saudia-online.com). The value of the riyal, as well as important economic issues, is monitored by SAMA (The Saudi Arabian Monetary Agency). SAMA s responsibilities have increased greatly over the last 15 years due to the tremendous economic growth of Saudi Arabia via the world oil market. According to www.saudinf.com, It s monetary policy, conducted in co-ordination with the fiscal policy of the government, and has promoted domestic price and exchange rate stability, thereby contributing significantly to the consolidation and development of the Saudi economy.
Overall, the economical system of Saudi Arabia, although based almost exclusively on one export, is extremely solid. Its roots are based in religion, which shows that the government is basing its economic plans on honesty and trueness with Islam and Allah. I for one would hope that the nation that supplies the majority of the world s oil would have a stable economy, and obviously Saudi Arabia has just that.
1. http://www.uni-wuerzburg.de/law/sa00000_.html accessed on March 30, 2001. The Saudi Arabian constitution.
2. http://www.saudia-online.com/saudi_arabia.htm accessed on March 30, 2001. Saudi Arabia, the country in brief.
3. http://www.oneworld.org/odi/pdn/drought/abdalla.html accessed on March 31, 2001. S.H. Abdalla, A. Hajooj and A. Simir.
4. http://www.awo.net/country/overview/crsau.asp accessed on March 31, 2001. Country Profile: Kingdom of Saudi Arabia.