Business and Entrepreneurship in Saudi Arabia. Burton Edward

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      2. Developing human resources so that the several elements of society will be able to contribute more effectively to production and participate fully in the process of development

      3. Diversifying sources of national income and reducing dependence on oil through increasing the share of other productive sectors in gross domestic product.7

      In viewing the similarities between the themes, rationale, and objectives of the First Development Plan and the most recent, the Ninth Development Plan, the comparisons between the Kingdom's economic and industrial profile during the 1970–1975 period of the First Plan and the 2010–2015 period of the Ninth, throws a strong light on the vision, foresight, and analytical powers the nation's planners have possessed since early in the creation of its modern economy.

      During the preparation of the First Development Plan leading up to 1970, the Kingdom faced an economic crisis unlike the economic turmoil facing it during the writing of the Ninth Development Plan, but a crisis nevertheless. Because of the nation's poorly managed economy by King Saud and the inexperienced close family members he appointed to key government positions, during the late 1950s and early 1960s, the Kingdom's finances were in very bad shape. Its currency was on a steep decline against all of the currencies of its trading partners. It was a nation whose market was flooded with foreign goods and possessed of virtually no global exports other than oil. The national debt had been on a steadier upward incline since King Saud assumed the throne from his father Ibn Saud in November 1953. And, as more foreign workers took up residence in Saudi Arabia for work, an increasing amount of the nation's wealth continued to escape the country as expatriated earnings.

      One must consider Saudi Arabia had virtually no heavy industry leading up to the 1970s. And, besides oil production, its basic economic output came from light manufacturing, construction, agriculture, and merchant trading and services. When the most recent National Development Plan, the Ninth, was drafted, the nation had a different economic profile. When surveying its industrial and economic might today through the lens of the Ninth Year Development Plan, one gains an appreciation over how close the Kingdom has adhered to its core values in deliberating its future. In its preface, the Ninth Development Plan stated:

      The challenges faced by Saudi fiscal authorities during the drafting of the Ninth Plan were numerous: a global financial recession in full swing, an alarmingly high Saudi unemployment rate and a steady inflow of foreign workers, an onerous and growing rate of inflation, higher costs of materials, supply, and labor for major priority construction projects, and a growing influx of foreign goods and commercial competitors challenging locally produced goods and domestic companies.9 Nevertheless, in preparing the Ninth Development Plan, the Kingdom had a strong foundation upon which to build a successive plan.

      During the Eighth Development Plan, 2005–2010 (1425–1430), the Kingdom experienced an annualized rate of growth in an already high level of investment of about 11.2 percent. This contributed to an increase in the average ratio of investment to real GDP from 21.1 percent in 2004, the last year of the Seventh Development Plan 2000–2005 (1420–1425 AH), to 28.1 percent.10 Because of historically high world oil prices for oil that had not ameliorated until 2008, the Kingdom's coffers were well cushioned to weather the global economic meltdown.

      In moving ahead with the Ninth Plan, the Ministry of Economy and Planning listed its expected accomplishments of the Plan as follows:

      The Ministry's expected deliverables at the macroeconomic level were listed as:

      • Growth in merchandise and services exports at an average annual rate of 4.5 percent, thus bringing their share of GDP to about 35.7 percent by the end of the Plan in 2014.

      • Growth in merchandise and services imports at an average annual rate of 7.7 percent, to bring their share of GDP to around 67.6 percent by the end of the Plan in 2014.

      • Growth in final consumption (government and private commodities and services at an average annual rate of 5.4 percent, to constitute around 90 percent of GDP in 2014.

      • Increasing the share of national manpower in total labor force (Saudization rate) from 47.9 percent in 2009 to approximately 53.6 percent in 2014 by providing 1.1 million job opportunities to labor market entrants.

      • Reducing the unemployment rate among the national workforce from around 9.6 percent in 2009 to about 5.5 percent by the end of the Plan in 201412 (See Table 1.2.).

Table 1.2 Main Indicators of the Ninth Development Plan (2010–2014)

      * By end of the Plan.

      Judged against its stated economic indicator goals in Table 1.2, in assessing the effectiveness of the Ninth Development Plan, the Kingdom may be seen as having gone a long way toward achieving its goals. Although expecting to bring down the unemployment rate from 10.5 percent in early 2010 to 5.5 percent within a five-year period may have appeared a tad ambitious, they were not far off. The Saudi Department of Central Statistics and Information (CDSI) reported that the unemployment rate in 2013 was 5.6 percent, a figure that held fast into the first quarter of 2014.13 And, more to the thrust of this book, the key indicator of how much more the Saudi private sector is playing a role in contributing to the growth in Saudi GDP is equally impressive. The Saudi private-sector's contribution to GDP at constant prices for 2012 was recorded by the CDSI at 58.8 percent.14 In February 2014, banking sector analysis of this activity for the month of January 2014 confirmed a strong Saudi private-sector performance. The Saudi British Bank (SABB) published the results of the headline “SABB HSBC Saudi Arabia Purchasing Manager's Index (PMI) for January 2014,” a monthly report issued by SABB and Hong Kong Shanghai Banking Corporation (HSBC). In it, the bank reported the Kingdom's non-oil sector activity grew at an accelerated rate for the third successive month to its highest rate since October 2012 because of elevated production and new orders.15

      Saudi companies are growing more, producing more, and exporting more non-oil goods than ever before. At the end of 2013, non-oil exports achieved СКАЧАТЬ