How Economic Interdependence Has Affected Saudi Arabia
Saudi Arabia has developed strong economic ties with other countries due to its large oil exports over the decades. As one of the world’s top oil producers and exporters, Saudi Arabia supplies about 10% of global oil demand. This has made the country highly dependent on oil revenues, with oil accounting for over 80% of its export earnings and 50% of GDP. However, economic interdependence has also benefited Saudi Arabia through increased trade, investments, and diversification opportunities.
Some key ways economic interdependence has impacted Saudi Arabia include:
Trade relations: Saudi Arabia is now the 20th largest importer and 19th largest exporter globally. Its total trade (exports + imports) accounted for over 50% of GDP in 2021. Trade surpluses from oil exports have boosted the economy.
Foreign investments: Countries importing Saudi oil have invested heavily in the kingdom’s infrastructure and other sectors. This includes investments from China, Japan, South Korea and Western nations under Vision 2030.
Economic diversification: Vision 2030 aims to diversify the oil-dependent economy by 2030. This is attracting investments in non-oil sectors like tourism, renewable energy, healthcare, education to boost competitiveness. Mega projects like NEOM are partnerships with other countries.
Skilled labor: With fewer oil jobs, Saudi Arabia needs skilled expats from Asia and West for its diversification drive. This addresses domestic skill shortages.
Regional competitiveness: Partnerships under Gulf Cooperation Council have integrated Saudi Arabia’s economy with regional allies like UAE. This enhances collective competitiveness versus global powers.
In conclusion, economic interdependence has significantly benefited Saudi Arabia through trade surpluses, foreign investments, diversification opportunities and skills development – helping transform the kingdom into a competitive non-oil economy as envisioned under Vision 2030. The country’s strong trade ties and partnerships are thus crucial pillars of its ongoing economic transition.
How Economic Interdependence has affected Saudi Arabia
Economic interdependence means the relationship between two economies that primarily depend on each other for supplies or other necessary materials. Interdependence mainly lies in the ability of an economy to specialize in a particular product. Specialization in production means high efficiency and high-quality parts, i.e., in car production, leather, and rubber may be sourced from a different country. In contrast, well-built machines, spare parts, and automobiles may be exported to the countries supplying the raw materials (Carbaugh, 2019). Economic interdependence is stimulated by industrialization, economic advancement, regional production, and labor specialization.
This research will examine the relationship between different economies producing specific services or goods. As one of the world’s largest producers of oil, Saudi Arabia has been successful in economic performance due to its relationship with other countries globally through purchasing and supply or economic interdependence amongst them. The simplest way to understand economic interdependence is through understanding the concept of international trade (Yu, 2020). Economic interdependence has placed Saudi Arabia internationally as the 20th Largest importer and the 19th largest exporter. As of 2021, Saudi Arabia’s total export rate was 34% of GDP, while its imports were 24.35% (Carbaugh, 2019). The trade balance was at $133 billion, indicating a trade surplus. Saudi Arabia has been able to gain business internationally, which has enabled economic stability.
Economic interdependence is helpful because both or all the economies in this kind of relationship are exposed to uniform growth regardless of their initial financial position.
The relationship between Saudi Vision 2030 and international competitiveness.
Saudi Arabia’s Vision 2030 has three main goals: a vibrant society, economic success, and ambitions. Vibrance in the community would be achieved through a focus on the Islamic faith. This campaign would be conducted through a series of commitments to increase the number of Umrah visitors. This campaign is estimated to bring about 30 million tourists by establishing one of the most prominent Islamic museums (Altman & Bastian, 2021). That alone expresses a strategic position for Saudi Arabia in the tourism and relationships sector globally. Tourism, culture, and entertainment opportunities enhance competitiveness, especially with the rising tourism sector in the United Arab Emirates countries.
Saudi Arabia has opened up its economy to more private investors from outside and within the country to achieve a thriving economy. It has also provided dynamic job opportunities for its citizens and the diverse population through economic diversification. Saudi Arabia exploited gaps in the education sector, entrepreneurship, innovation, tourism, sports in the deserts, and privatization of state-owned assets (Saudi Arabia Oil & Gas Report, 2017). To achieve international and regional competitiveness, Saudi Arabia has also established a wealth fund known as the Sovereign Wealth Fund, which would fund underdeveloped sectors such as industrialization, sustainable energy, and tourism. Saudi Arabia must implement such provisions to compete at a global level economically against economies like China and the USA. Saudi Arabia must also focus on accountability, transparency, and effective governance to establish long-term success. Corruption, incompetencies, and unaccountability are not to be tolerated.
Reference
Altman, S. A., & Bastian, P. (2021). EBSCOhost login. EBSCOhost Login. https://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=149521506&site=ehost-live
Carbaugh, R. J. (2019). International Economics (17th ed.). Cengage Learning Inc.
Saudi Arabia Oil & Gas Report. (2017). Saudi Vision 2030 Document. Homepage: The Progress & Achievements of Saudi Arabia – Vision 2030. https://vision2030.gov.sa/sites/default/files/report/Saudi_Vision2030_EN_2017.pdf
Yu, Z. (2020). PressReader.com. PressReader.com – Digital Newspaper & Magazine Subscriptions. https://www.pressreader.com/china/china-economist/20201108/281565178309781
