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Vincent Huston
Vincent Huston is a student in Human Environment at Concordia University.

Domestic Challenges Facing Saudi Arabia

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Ever since the discovery of its oil reserves in 1938, Saudi Arabia has been building its way towards becoming a global superpower. Currently, they export 19% of the world’s oil, the most out of any other country.

 

This element combined with the fact that worldwide oil prices are now on the decline means that Saudi Arabia finds itself in a difficult situation as 90% of its economy relies on this precious resource. With that in mind, the country’s social, cultural and political climate greatly contrast that of other industrialized nations making it quite difficult for rapid change to occur. This situation is highlighted by the state’s control over all oil related production and stringent business regulations which makes it difficult for the private sector to develop.

 

The issues mentioned above are partially linked to strict cultural norms that are deeply engrained within the social fabric of the general population. Firstly, only about 40% of Saudi Arabians have jobs. In the country, opportunities stem from relations between friends and relatives, just like in many other non-western cultures. This contrasts greatly from the situation in industrialized nations. Secondly, a typical workweek starts on a Sunday; workdays are much shorter and contain many more breaks in order for Saudis to perform their daily prayers. This workweek can be quite problematic since they cannot realistically compete with the longer workdays of other markets.

 

Another important issue is in regards to the divide between men and women as a very small percentage of the former work. On top of that, service sector employment is frowned upon since it does not conform to upheld cultural norms. Lastly, private companies who hire locals find themselves to be quite disappointed with the results. This is because the local population lacks the required technical skills and habits in regards to productivity that are standard within typical industrialized nations. It is then clear that if Saudi Arabia wants to continue prospering, serious reforms must be implemented in order to ensure its modernization.

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With such a huge portion of the country’s economy relying on oil and with a global market that is constantly changing, complacency is clearly not an option. In fact, a plan outlining socio-economic goals for 2030 has been put forward. The first step is to modify the current public investment fund by taking ownership of the state owned oil conglomerate Saudi Aramco. Its current value of SAR 600 000 billion could jump to 7 trillion. This money must be used so that the country minimizes its dependence on oil and contributes to the growth of the private sector.

 

With that in mind, the education system must be modernized so that the workforce can adequately meet the needs of private companies. This means that educational institutions must properly prepare the youth for a working environment that is competitive and fast-paced, especially in sectors that require very technical skills. The education system must also promote independent thinking since developing the entrepreneurial spirit is vital for the eventual creation of innovative businesses. Having said that, even more can be done to convince young people to get involved within the world of business. To do this, bureaucratic structures certainly have to be relaxed as it is very difficult to start a company. Currently, entrepreneurs go up against an insurmountable amount of paperwork and regulations that often lead to various forms of corruption.

 

To conclude, it is fair to say that Saudi Arabia’s lofty plan to enact reforms for 2030 is probably a little too ambitious. Doing away with cultural and religious norms that are deeply rooted in time may lead to a long list of growing pains. On the other hand, educational reforms must be pursued so that the next generation can provide for themselves all the while reducing their dependence to the state. The country must also diversify its economy so that it can successfully navigate through the volatile global market.

The Prince Arthur Herald

Photo Credit: Twitter, @BusinessNewzzz

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