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Economic Diversification Trends in the Gulf: the Case of Saudi Arabia

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  • Sarah Muhanna Naimi

    (Qatar University)

Abstract

A national economy which is dependent on income from just one source is vulnerable, especially when that income comes from non-renewable resources. The sustainable prosperity of an economy thus relies on the successful implementation of economic diversification. Diversification is key to creating an attractive, flourishing environment in a country and improving the quality of its institutions and its citizens’ lives. The countries of the Gulf Cooperation Council (GCC) are accelerating their efforts to achieve economic diversification, with their national visions reflecting a shared aim of securing permanent high standards of living for future generations. After the first boom in oil prices in 1970, Saudi Arabia’s government introduced primary development plans to diversify its economy. In 2016, it announced its 2030 vision to establish sustainable growth through economic diversification. The economic diversification strategy of Saudi Arabia is founded on several pillars, including investment in human capital and education and investment in non-oil sectors such as tourism. This paper aims to analyze the economic diversification trends in the GCC region with a special focus on Saudi Arabia as a case study. Within this wider context, the paper will concentrate on Saudi Arabia’s efforts to achieve diversification by building a knowledge-based economy. Focusing on the quality of education and research improves the human capital available in the country which contributes to the growth of the economy. Results reveal that although Saudi Arabia has embarked on its diversification plans, the current status of oil prices, the deficit in the Saudi general budget, and the country’s traditional educational system will hinder and slow this process.

Suggested Citation

  • Sarah Muhanna Naimi, 2022. "Economic Diversification Trends in the Gulf: the Case of Saudi Arabia," Circular Economy and Sustainability, Springer, vol. 2(1), pages 221-230, March.
    • Handle: RePEc:spr:circec:v:2:y:2022:i:1:d:10.1007_s43615-021-00106-0
    DOI: 10.1007/s43615-021-00106-0
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    References listed on IDEAS

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    1. Wilhelms, Christian, 1966. "Development through export diversification: Some suggestions," Intereconomics – Review of European Economic Policy (1966 - 1988), ZBW - Leibniz Information Centre for Economics, vol. 1(1), pages 9-12.
    2. David Cowan, 2018. "The Coming Economic Implosion of Saudi Arabia," Springer Books, Springer, number 978-3-319-74709-5, July.
    3. Peterson K. Ozili, 2021. "Circular Economy, Banks, and Other Financial Institutions: What’s in It for Them?," Circular Economy and Sustainability, Springer, vol. 1(3), pages 787-798, November.
    4. Hvidt, Martin, 2013. "Economic diversification in GCC countries: past record and future trends," LSE Research Online Documents on Economics 55252, London School of Economics and Political Science, LSE Library.
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    Cited by:

    1. Sweidan, Osama D. & Elbargathi, Khadiga, 2023. "Economic diversification in Saudi Arabia: Comparing the impact of oil prices, geopolitical risk, and government expenditures," International Economics, Elsevier, vol. 175(C), pages 13-24.
    2. Salem Hathroubi & Chaker Aloui & Hela Ben Hamida, 2024. "Economic Diversification, Oil Revenue and Energy Transition in Oil Dependent Countries: A Wavelet Decomposition and Panel Data Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 14(5), pages 447-456, September.

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