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Misallocation of Resources in Saudi Arabia Research Paper

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Updated: Apr 17th, 2020

Introduction

Resources are scarce and need to be utilized in an appropriate way to feed the entire population; however, this is not the case in many countries. Saudi Arabia is a fast growing economy which is not exempted from resource misallocation. Misallocation of resources in the country takes the form of misuse, inefficiency in resource utilization, resource distribution inequality, and practices which do not support sustainable development.

Industries, companies, government, and individuals are all responsible for the misallocation in one way or another. When there is a misallocation of resources, the resultant is social and economic damage to the environment (Madawi, 2002). This paper discusses social damage caused by the misallocation of resources in Saudi Arabia.

Inequality Resource Distribution

In Saudi Arabia, resources are not evenly distributed in the country. There are some parts and some individuals who do not have a fair share of the available resources. One of the resources that are not evenly distributed is Oil. The country is a leading oil exporter in the world with Saudi Armco as the main mining company for the product. The inequality, especially for oil benefits, has resulted in social rivalry among people of different regions in the country.

The country has a larger portion of it being on a desert environment, and thus the default believe is that the people should be sharing the available resources equally, which has not been the case. Oil exploitation was being undertaken in the conditions of the desert, and thus there was a lot to be encountered; the capital owners exploit the laborers since they are aware that there is no other form of employment they can get.

The first challenge to the laborer is harsh desert conditions with the hot sun during the day and extreme cold at night. This leads to diseases and makes the exploitation difficult day by day. It is worth to note that the accommodation facilities that are available for laborers are not of a good standard (U.S. Department of States, 2010).

Uneven development

Oil as the major resource for the country has controlled how development pattern is adopted in the country. Those places that have the reserves have been given the priority in development at the expense of other parts of the country.

For example, around Saudi Armco, there have been increased developments of infrastructures, which include railway line, road, and pipeline to assist the company in its production. This is not even in other parts of the country. When a country has no even distribution of resources and development, it results in a country which has extremes; some people are extremely poor while some others have large deposits of resources.

Social Evils

There are huge inequalities in the distribution of resources; there are the extremely rich people in this country and those who live from hand to mouth. The level of poverty has increased so much that dying out of hunger is common in the country. The low employment rate has made people who are well learned to look for alternative means to survive. The alternatives that are taking the course are social evils.

There is increased insecurity in the country; the rate then is working to the bad of the country since no investor, either local or foreign, can feel secure enough to invest in the country. The trends continue. The living standards of the people in the two countries have been deteriorating by the day. Immorality and decay of morals also are affected by the perception that corruption rewards are continually reinforced. This leads to an ever increasing poverty.

Corruption

The misappropriation of resources in all sectors and to people effectively has resulted in corruption as people look for ways to get the resources for their use. The need for resources has brainwashed the minds of the citizens, making them believe that corruption is a necessary evil in the society. This has been reinforced by the “reward” that the corrupt are seen to acquire in the society in the form of resources.

In Saudi Arabia, a large number of the successful politicians are the people that have a corruption history; they have used the country’s resources to their benefit at the expense of the whole nation. They do their corrupt deals and make their way to the parliament. This is seen as an achievement in life and thus convincing a normal citizen that corruption is evil won’t yield many positive results. The culture of corruption has taken precedence and thus even reducing corruption has become even more of a problem.

Social Economic Factors

Major resources in the county are exploited by international companies. This has resulted in profits generated being flown to these companies country of origin. The rate at which the infrastructures are growing is wanting, compared to the potential that the country has. The amount that is kept aside in the government budget for the development of infrastructure ends up in the pockets of a few individuals.

This is at the expense of the country, this has made the country to make their infrastructure through grants and donor funding, the donor confidence has been eroded, and funding has reduced. The infrastructure is the backbone of economic growth, with the small rate the country cannot develop. The low rate of economic growth has led to high levels of poverty.

The population is suffering the lack of social amenities. Foreign direct investments are highly discouraged, and thus, the unemployment rate of the country has increased rapidly. In the government institutions, the service offered there is of low quality, especially when the service recipient has not given some bribes. This has discouraged those people that are honest from getting services from the institutions and the economy suffers (Kelly, 2007).

Unemployment

The resources in the country are left to the disposal of a small number of people. They are the owners of capital and thus have the power to control the economy. This is done through oppression of workers who do not have any other source of revenue. The following are the unemployment styles that have developed in the country, Structural unemployment; this is where the economy cannot provide jobs to all people in the economy, though there may be jobs, but the available situation offers a mismatch between the jobs.

This may be in the form of skills required, which the unemployed people do not have. This is an example of unemployment that was brought about by computers introduction. In most cases, if one is suffering structural unemployment, it is as a result of improvement in a certain area, or a change in the way things are done. It is appreciated that there are jobs, but the people are not fit for the jobs. If one improves his skills, he is likely to get his job back.

The second form of unemployment in the country is fictional unemployment; this is when a worker is moving from one employer to another; there is a period when he remains temporary momentarily. It is also referred to as vocational unemployment. When an employee loses his job to a robot, he is not losing it momentarily so this is not fictional unemployment. The form of unemployment is structural unemployment.

Manipulation by Multinational Companies

Multinationals dominate the resources in the country, and thus they can control affairs in the country. They know that they are required in the country for its development and thus, they utilize this chance as an advantage to manipulate affairs in the country.

They have sometimes financed political practices in support of candidates who will favor them. When they are favored and encouraged to stay in the country, they do not conduct their business with an ethical standard as expected since they know that they are protected. The resultant is a decreased welfare to the people (Ramady, 2010).

Conclusion

Resources are scarce and need to be utilized in an appropriate way to feed the entire population; however, this is not the case in many countries. Saudi Arabia is a fast growing economy which is not exempted from resource misallocation. The effects of misallocation are manipulation by Multinational companies, unemployment, social economic factors, corruption, social evils, uneven development, and inequality resource distribution.

Reference List

Kelly, A. (2007). Energy supply and renewable resources. New York: Infobase Publishing.

Madawi, A. (2002). A history of Saudi Arabia. Cambridge: Cambridge University Press.

Ramady, M. (2010). The Saudi Arabian Economy: Policies, Achievements, and Challenges. New York: Springer.

U.S. Department of States. (2010). Background Note: Saudi Arabia. Web.

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