Introduction
The oil industry has changed the Saudi Arabian economy and provoked rapid development. Currently, the Kingdom continues to be the world’s greatest energy repository. Such a role is beneficial for business. Taking into consideration the positive results of the social and economic reforms which were undertaken in the recent past, it is appropriate to assume that Saudi Arabia is now at a vantage point for further economic evolution.
Political Reforms
The government’s policies and economy are interdependent. King Abdullah admitted that government should pay more attention to the social and civil infrastructures as well as to the political support “so that Saudi citizens can participate fully in creating towards and benefiting from a new economy” (Ramady, 2010). The public sector obtained potential for development. Women attained more rights and opportunities to take part in the social and economic evolution. The most important changes took place in the judicial system, which now “is more in line with international practices” (Ramady, 2010). Since foreigners have a great impact on the development of the private sector, sticking to international law made Saudi Arabia more tolerant to international cooperation. As a result of interaction with the other countries, the country’s modernization noticeably increased its speed.
Private Sector Economy
In Saudi Arabia, government plays a significant role in the economic functioning of the private sector. Nowadays, the oil industry, which contributes to the economy development most, is “a private wealth” (Luciani, 2005). In Saudi Arabia, many companies are state-owned, but there are also the enterprises that are ruled by individual entrepreneurs. “Entrepreneurs are individuals or companies that initiate the creation and establishment of new activities, be they large or very small, and be they in industry, commerce or services” (Luciani, 2005).
The few factors that affirm the consolidation of the Saudi private sector are the presence of foreign companies, development of property market and land distribution, agricultural extension, government procurements and support.
It is a well-known fact that the investments in business are politically important. The present-day Saudi government encourages the emergence of foreign companies in the country. The foreign labour force contributes to the economy greatly. The local businessmen try to attract foreign enterprises that might thrive and bring profit to the Kingdom.
Property speculation is one of the sources of profit, especially now, when Saudi Arabia experiences the rapid growth of population. Entrepreneurs buy, sell, and rent real estate. Nowadays, the property market is highly competitive, and it is possible to conclude that this market makes a significant contribution to the economic development.
The companies compete for the contracts with the government. Government procurement is highly beneficial for business. The procurement is possible due to knowledge, competitive bidding and strategies. The obvious conclusion follows from this, that only the few companies have the needed qualities that make them competitive in the government market. Nevertheless, all the private-owned companies can get support in the Saudi Industrial Development Fund, where it is possible to obtain loans for business. According to estimations, the governmental support of the private entities will increase in the future.
Education Policies
Knowledge is a base for economy development. Saudi government recognized that improvement of the educational quality leads to success. The process of educational reformation takes place, which will lead to the provision of the skills and knowledge necessary for the competitiveness in the modernized global market. “Education and training systems should not only be upgraded but should keep abreast of advancements in knowledge and technology, and pay attention to the promotion and dissemination of culture” (Malik & Niblock, 2007). According to researchers, higher education must be business-oriented. It is possible to assume, that the interrelation of the education and the industry is bound to provide a competitive workforce and efficiency.
Conclusion
The economic development in Saudi Arabia gains pace. The social and political reforms conducted by the government influence the situation in the Kingdom positively. Reforms made the citizens freer in regard to their rights. Running a business is now available not only to the Saudi elite. As it can be observed, the reforms caused the emergence of small and large private companies, which, with the support of the government, make the economy thrive.
References
Luciani, G. (2005). From private sector to national bourgeoisie: Saudi Arabian business. Saudi Arabia in the Balance: Political Economy, Society, Foreign Affairs, 144-181. Web.
Malik, M., & Niblock, T. (2007). The political economy of Saudi Arabia. New York, NY: Routledge.
Ramady, M. (2010). The Saudi Arabian Economy: Policies, achievements, and challenges. New York, NY: Springer.