ECONOMIC DEVELOPMENT OF SAUDI ARABIA 2030

Executive Summary:

A very significant part of the Saudi economy is dependent on oil production, and it is a member of OPEC. We will fully cover the rise of Saudi Arabia's economy and the kingdom's future ambitions in this article. Saudi Arabia's economy experienced significant growth in 2010 due to increased global economic recovery, which led to an increase in oil prices and more fiscal expenditure by the government, all of which resulted in higher non-oil GDP. Saudi Arabia is the biggest economy in the Arab world and the Middle East, and it is also among the twenty most economically powerful countries in the world. Saudi Arabia is a member of the G20, a group of nations that includes Germany, the UK, and the United States. In December 2020, the Saudi Gross National Product (GNP) was estimated to be $189.344 billion. It is an increase of 183.956 USD billion compared to the previous figure of 183.956 USD billion for Sep 2020.

Saudi Arabia has the second most valuable natural resources in the world, with a total value of $34.4 trillion. In the globe, Saudi Arabia is the top petroleum exporter, with confirmed petroleum reserves of 887 billion barrels. Natural gas is also a powerful energy source with the fifth-largest known reserves in the world. Saudi Arabia formed the Supreme Economic Council, which was tasked with formulating and better coordinating economic development plans in order to expedite commercial and industrial change in the country. In all, petroleum (87% of Saudi government income, 90% of Saudi export revenues, and 42% of GDP) provides for three-quarters of the Saudi budget, half of the country's export profits, and close to nine-tenths of the whole Saudi economy. Because Saudi Arabia's vast oil reserves and production are under state control, Saudi Aramco is primarily responsible for the overall management of Saudi Arabia's oil resources. The growing understanding of the Kingdom's water resources, coupled with the potential for agricultural output, increases the likelihood of an increase in the supply of food and by-products in the coming years. There are some that will need industrial processing before they may be consumed.

During the global economic downturn of the last several years, Saudi Arabia outperformed other nations by growing its economy. In line with the economic growth, there has been a rise in demand for imports, with the major source of this being massive construction projects. These types of business ventures with a free flow of foreign investment had been expected to start-up in the first quarter of 2007, including insurance services, wholesale/retail commerce, communications services, and air/rail transport services. The government plays a significant part in the industrial activities of the Kingdom, although the private sector has taken on more responsibility as a result of encouragement and under the Kingdom's national system of free enterprise.

Economic Development Plans:

The Saudi government, despite the fact that the country's economy was heavily reliant on oil income, planned to make fundamental changes to the country's economic structure. The goal was to diversify the economy away from oil production and towards other areas of production. It took meticulous planning and thorough execution of a development program with well-defined goals to achieve such an economic revolution. With the adoption of the First Development Plan in 1970, the nation's drive for economic development and growth officially started. In this way, a succession of five-year programs was launched, and they are still in effect now. The initial step of this process consisted of the development of an infrastructure capable of supporting a contemporary economic foundation. The next step was to create the human resources that would be required to aid in the implementation of the projected economic change. Finally, the emphasis might turn to economic diversification, which would include the development of the industrial, agricultural, and other sectors, which is already well underway in the country. The construction of the physical infrastructure took place in phases throughout the course of the first three development plans, with the last phase completed in 2010. As the infrastructure began to take form, the government embarked on a massive initiative to increase the country's manufacturing base. This was accomplished via the use of two distinct but parallel courses. One was targeted at the development of the country's oil industry, while the other was aimed at the establishment of the modern non-oil manufacturing industry.

Increased international and domestic investment, as well as the development of human resources, were the primary goals of the Eighth Five-Year Development Plan (2005-2009). Saudi Arabia's gradual but significant industrial and economic change has been achieved during the whole duration of the development plans, thanks to the careful direction and active backing of the Saudi government throughout. The fact that, in the 25 years between 1970 and 1995, the non-oil sector's share of GDP increased from 46 percent to just over 70 percent, and that this GDP tripled, to 125.1 billion United States dollars, reflecting an 8.6 percent growth rate in current prices, is sufficient to assess the success or failure of this endeavor.

?Major economic fields:

In this report, we will delve into the agricultural sector, the industrial field, the investment in the electricity-producing area, etc. This includes a wide range of disciplines, and all of them have a major effect on the economy of a country.

?Saudi Agricultural Sector:

It's been amazing to see Saudi Arabia's agricultural growth over the past three decades. An achievement made in a nation whose rainfall averages around four inches a year, which is one of the lowest worldwide, is the transformation of large swaths of desert into agricultural land. In addition to supplying wheat, dates, dairy products, eggs, fish, poultry, fruits, vegetables, and flowers to international markets, Saudi Arabia also exports wheat, dates, dairy products, eggs, fish, poultry, fruits, vegetables, and flowers to international markets. People in Saudi Arabia formerly ate dates as a staple food. Dates are now primarily produced for worldwide humanitarian assistance. The ministry of agriculture is responsible for agricultural policy, which is one of the ministry's primary functions. The other organizations the Saudi Arabian Agricultural Bank helps include the Saudi Arabian Agricultural Bank (SAAB), which administers subsidies and provides interest-free loans; and the Grain Silos and Flour mills Organization, which buys, warehouses, and distributes wheat and flour mills. Reclamation initiatives and funding for research projects are also offered by the government. Agriculture in the Kingdom has been strongly aided by the private sector. Most of this is because the government provided interest-free loans, access to industry professionals, as well as in-kind resources such as free seeds and fertilizers, cheap water, fuel, and power, and importation of raw materials and equipment at little or no cost.

On January 1, 2018, the Saudi Ministry of Environment, Water, and Agriculture announced the adoption of an updated strategy aimed at promoting organic farming in the kingdom. The plan's goal is to expand organic agriculture production by 300 percent, with a budget of US$200 million set up for this purpose.

Development of the Industrial Sector:

The Saudi Arabian government's economic plan is a major factor in this country's industrial development. The goal is to decrease the kingdom's reliance on oil income. Intending to foster job growth in many industrial sectors, the government has incentivized the development of several industries. In an attempt to encourage the private sector to join in the national industrial endeavor, the government has offered several incentives. Private Saudi manufacturing firms may find everything they need to do their work in eight industrial parks at a very cheap price. It is easier to get credit on liberal terms for projects like this. A free-market economic paradigm has been implemented in Saudi Arabia. It is encouraging to see that financial, industrial, and trade sectors of the economy have made significant headway, helping to drive growth in the private sector, particularly in building and farming. The ministry in charge of economic and social development comes up with long-term economic and social objectives for the country.

SIDF offers low-cost medium and long-term financing for industrial projects with a longer repayment period. In addition, the Fund offers marketing, technical, and financial assistance to all initiatives that receive Fund funding in order to increase their prospects of success. With the passage of the new foreign investment legislation, the State Investment Development Fund (SIDF) will be able to provide loans to projects that are entirely controlled by foreigners. It's all for the sake of expanding the economy.

?Trade on a Global Scale:

In a very short period of time, Saudi Arabia's free-market economy has seen significant developments. As the dominant economic and social force in its area and globally, the country has progressed from an agrarian society to a leading power in a wide range of economic sectors. The Saudi economy relies heavily on oil production, which accounts for almost all of the country's export revenues. The Saudi Arabian economy has diversified over the last several decades, and now, the country's many industries provide various products to foreign customers throughout the world. The joining of Saudi Arabia to the WTO in December 2005, which was a major milestone, opened up Saudi markets to the world economy, created employment, and increased investment from abroad.

International trading accounts for 62 percent of the country's gross domestic product (GDP) (2020). As a result of Covid-19's impact on global trade dynamics, exports were predicted to decrease by 10.8 percent in volume in 2020, while imports were projected to reduce by 16 percent. Countries that are open to trade tend to develop quicker, innovate, and increase productivity, and so they are better able to offer their people a greater standard of living. Trade and global value chains can foster economic development while simultaneously mitigating global poverty.

Water And Energy Resources:

Power generation is a fast-expanding industry in the kingdom, and they are regarded as one of the most vital strategic sectors in the country. At now, the Kingdom has the biggest desalination market in the world, and the government is working to expand the reuse and water treatment sectors. In addition, it plays a significant role in the discovery of solutions and breakthroughs in the field of water technology and research. On the basis of a solid legal foundation and legislation in the production, transmission, and distribution of electricity and water, as well as a commitment to protecting the rights of investors and consumers, Saudi Arabia is regarded as one of the most profound, committed countries about the ongoing privatization and localization of the energy and water sectors in both the developed and developing worlds. Aside from that, the increasing demand for energy and water in the kingdom continues to rise as a result of the continuous and sustained development in the industrial, residential, and commercial sectors.

Approximately 16 billion cubic feet of runoff is collected by more than 200 dams each year, which is stored in reservoirs. Some of the biggest of these dams are situated in the Wadi Jizan, Wadi Fatima, Wadi Bisha, and Najran valleys, among other areas of Saudi Arabia. The SWCC hydroelectric power plant in the Saudi Arabian city of Jeddah produced about 452 gigatons per hour as of 2018.

?Banking System:

Saudi Arabia has a sophisticated banking system with 13 commercial banks, which is considered a success in the world. Retail and corporate banking, investment services, brokerage facilities, and derivative transactions are all provided by Saudi banks, in addition to credit cards, ATMs, and point-of-sale transactions, among other things. In addition, the stock market in Saudi Arabia is booming. Approximately SR 60 billion [the US $16 billion] worth of shares are exchanged yearly on the stock exchange. The Tadawul All-Share Index (TASI) of the Saudi stock market is one of the most heavily capitalized stock exchanges in the Arab world, with a total market capitalization of about $1 trillion. Several government entities are in charge of overseeing the banking and financial industry. The Ministry of Finance is in charge of monitoring economic policy and has created five specialized credit organizations to offer loans to people for agricultural, industrial, and building development projects, among other things. They intended to do so in order to expand their economy.

The Saudi Vision 2030 for economic development:

According to Saudi Vision 2030, the country's reliance on oil will be reduced, its economy will be diversified, and public service sectors such as health, education, and infrastructure will be developed. Other sectors such as leisure and tourism will be developed as part of the plan. Strengthening commercial and investment activity, expanding non-oil foreign commerce, and presenting a softer and more secular image of the Kingdom are among the key objectives. The plan also includes boosting government expenditure on the military while also expanding the production of military equipment and munitions. Crown Prince Mohammad bin Salman made the first public announcement about the project on April 25, 2016. According to a directive from the Council of Ministers, the Council of Economic and Development Affairs (CEDA) is responsible for defining and monitoring the processes and policies that are critical to the execution of "Saudi Arabia's Vision 2030." The overarching goal of the vision is to build the country into the "heart of the Arab and Islamic worlds", make it a leading investment destination, and position it as a central point in Afro-Eurasia.

q A dynamic culture that includes urbanization, culture, sports, the Hajj, UNESCO historical sites, and an extra five years of life expectancy

q a flourishing economy – job growth, women in the workforce, the Foreign Investment in Egypt initiative, international competitiveness, the Public Investment Fund, non-oil exports

q A fast-growing country with increasing revenue from non-oil sources, governmental effectiveness, more e-government use, greater family financial savings, and volunteerism.

?Initiatives and projects:

?A comprehensive national transformation project:

On June 7, 2016, the Council of Ministers adopted the National Transformation Program, a 10-year plan detailing the overall objectives and measures that would be accomplished by 2020. This marks the beginning of a three-phase five-year campaign. Each phase will support getting the Kingdom on track to achieve Vision 2030's ultimate objectives. In January 2016, Crown Prince Mohammed bin Salman (often known as MBS) declared that Saudi Aramco will go public and offer shares to the public. Although only 5% of the business will be available to the public. Aramco reported net revenue of $111.1 billion in 2018 in their financial results published in March 2019. Aramco has said that it is working on breaking away from the Saudi Arabian Ministry of Investment before going public.

The entertainment industry:

On May 20, 2016, it was reported that a General Authority for Entertainment (established with over $2 billion in investment) had been put in place. In Saudi Arabia, the first public performance including, both an American country artist, Toby Keith, and a Saudi vocalist, Rabeh Sager, occurred in May 2017. A 334 square kilometer (33,400 hectares) sports, cultural, and entertainment complex was recently unveiled in Al-Qidiya, some 40 kilometers southwest of Riyadh. A Six Flags theme park is on the project scheduled to open in 2022. In commemoration of the country's 87th anniversary, there were concerts and performances as part of Vision 2030. A precedent had been set by women's admission to Riyadh's King Fahd International Stadium for the first time.

The General Sports Authority of Saudi Arabia announced a 10-year agreement with WWE to host pay-per-view events in the country, starting in March 2018. In Jeddah, Saudi Arabia, the first event in the series, called The Greatest Royal Rumble, took place on April 27, 2018. Women's rights are now being held back, thus WWE's female performers are not a part of these events. Lacey Evans and Natalya took part in the first women's professional wrestling bout staged in Saudi Arabia on October 31, 2019, at Crown Jewel. They both donned black leggings and T-shirts over bodysuits instead of their usual ring gear, as they observed modest dress. On April 18, 2018, AMC Theatres opened the first new movie theatre in Saudi Arabia in 35 years.

Tourism Industry:

The two enormous tourist projects along the Red Sea that the Saudi government had planned were to be managed by Richard Branson, who would serve as the project's director. As part of the Saudi Vision 2030, Saudi Arabia officially announced on September 27th, 2019, the issue of a tourist visa, which would enable tourists from 49 countries to visit the kingdom for up to 90 days for a cost of 80$. The Visa will be valid for three months. The Visa may be granted either online (eVisa) or on arrival at the airport.

Fiscally sustainable policies:

According to Saudi Vision 2030, by increasing the efficiency of govt expenditure on large projects and working expenses, the government has managed to make significant savings in its capital expenditures while still meeting operational spending obligations. In addition, the plan has supported the country's ability to increase its overall budget by tapping into non-oil revenues and providing supportive financing tools. It helped the country to meet all of its budgetary commitments through the National Debt Management GC and debt management, budget execution, digital and technical transformation, and enhanced transparency.

Discussion:

Economic growth in Saudi Arabia is based on a variety of variables that generate revenue, including growing non-oil investments, production, and manufacturing for export markets. It is predicted that the participation of the private sector would increase productivity in all areas as a result of the investment, which helps to diversify sources of revenue and create more employment. In addition to boosting the added value of the oil industry, the improved productivity of businesses will raise the percentage annual growth rate to 5.2 percent. Several policies were put in place by Saudi Arabia in order to get their economy free of the grip of the oil industry. This is reflected in the preceding papers on growth drivers in Saudi Arabia, which were published in 2014. To reduce reliance on oil revenues and increase income diversification, particularly in the period following the drop in oil prices, it is necessary to add value to the Saudi Arabian economy through the development of an econometric model that explains oil alternative sources of revenue.