Deconstructing the Saudi Economy

  • David Cowan


To understand the scale of the difficulties Saudi faces, there are six structural areas where policy and approaches need to change in order to solve the problems. As noted, the need to balance oil wealth and the need for diversification are not new ideas for Saudi Arabia, they have been policy issues for a long time and long understood as weaknesses in the kingdom’s socioeconomic model. However, the Saudi economic infrastructure has not made sufficient progress to date to counter the dominance of oil, the challenges of a unique business environment and a bulging welfare provision. Saudi faces internal and external threats, and there is little time or room for complacency this time round. Falling global demand and the rise of alternative energy, especially shale gas, are elements beyond Saudi control. The International Energy Agency released a report in November 2012 which predicted the United States would overtake Saudi and Russia as the largest oil producer by 2017, a prediction made more solid by a 4 July 2016 report that stated the United States now has the largest oil reserves. This puts a somewhat different complexion on the “America” and “big oil” argument as the basis for US-Saudi relations, as well as arguments about US oil independence. In conversations I have had with focus groups since 2014, I have witnessed complaisance turn to real concern over the economic changes occurring in Saudi.


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Copyright information

© The Author(s) 2018

Authors and Affiliations

  • David Cowan
    • 1
  1. 1.Boston CollegeBostonUSA

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