Promotion of a Wider Economic Diversification for Rentier States

The Economic and Financial Committee (ECOFIN), second of the six committees of the United Nations General Assembly, has always been vigilant about economic growth and development issues. This committee has continued its assistance to developing countries with the opportunity to prosper along with financial aid. The matter of economic diversification is absolutely irresistible to determine the future of the rentier states. Measures taken to reform the economic policies of rentier states need to be discussed globally as this also has an effect on the International Economy and Global GDP. The Kingdom of Saudi Arabia has been an oil-dependent economy since the first tanker of oil was exported in 1938. The country possesses one-fifth of the world’s proven oil reserves and is the largest exporter of oil in the world. Petroleum accounts for 80 percent of budget revenues, 45 percent of GDP, and 90 percent of export earnings and US$210 billion is invested back into the country. However, as times passes the oil reserves of the kingdom starts depleting and Government has reached a position where preparation needs to be taken for the end the rentier state mentality and promote diversification of economy. A huge part of the Saudi Nationals are unemployed and work sectors are being accumulated by expatriates and foreign workers. The Saudi Arabian Government has proposed a series of reform plans to educate nationals to decrease the unemployment rates and increase the number of Saudi nationals in the workforce. Additionally, the kingdom proposed strict nationalization quotas in the private sectors, meaning businesses will be required to hire a much higher rate of citizen workers. By the end of the next decade, Saudi Arabia hopes that by investing in private enterprises and encouraging those enterprises to prioritize hiring Saudi nationals, they may increase the GDP generated by small businesses from 20 percent to 35 percent while simultaneously lowering the unemployment rate to 7 percent.

The Saudi Arabian Monetary Agency cites 13 achievements during 2010 that illustrate the restructuring of the economy and the privatization process. The achievements include - completing privatization steps of Saudi Arabian Airlines, establishing the National Water Company (NWC), signing partnership contracts with the private sector to manage, maintain, and operate the water and sewage sector, approval of the sale of state’s shares in bilateral companies to the private sector, application of a new tax system increase ease of paying taxes, to reduce financial cost and improve quality level, the Supreme Royal Court approves the Ministry of Education’s request for expanding participation in the education sector to the private sector, approval for development of school infrastructure with expansion of school transportation and in-school catering. In the Ninth Development Plan, which began in 2010, the prioritized goal of the Council and Ministers was to develop and diversify income sources and to achieve optimum utilization of available economic resources to accomplish their goal of diversification. The six objectives of the Ninth Development Plan are as follows:

1. Increasing the standard of living and improving the quality of life for citizens
2. Achieving balance between population growth and natural resources
3. Rationalizing immigration to major urban areas in all regions of the Kingdom
4. Reducing the ratio of expatriates in the population structure
5. Reducing mortality rates of infants, children below 5 years, and maternity
6. Increasing the opportunities to make use of human resources, especially faculties and qualifications of the youth.