Major Social-Economic problems of Saudi Arabia in XXI century

The main and the most important problem of Saudi Arabia's economy is a strong dependence on the oil sector. The oil sector accounts for about 58% of GDP. In this regard, appears the question of economic diversification. The development of diversification plan began in 1996, according to the second five-year plan of economic development. However, the plan still has not brought significant results (you can see it from the statistics in the appendix). One of the key points of the economy's diversification is the development of the gas sector. Saudi Arabia is ranked sixth in the world reserves of this type of fuel (which is 3.9% of the world's reserves), but this sector remains undeveloped. The Government is making big bets on the development of gas, as they suppose it will help Saudi Arabia to become less dependent on oil. But the development of the gas industry will not help Saudi Arabia to diversify its economy, because this industry is related to the oil and will only aggravate the kingdom dependence on hydrocarbons .

An important problem associated with the energy industry is a high level of energy consumption in the country. Government subsidized energy prices and carries an energy-intensive projects of industrialization and urbanization. According to the report of Saudi Electricity Company, in 2011 nearly a third of oil production in the Kingdom (8.5 million barrels per day) goes to local consumption. Moreover, the report's authors warn that if the consumption and production keeps the current level, by 2030 the country will be unable to meet the needs of the local population.

Another acute problem is the costs of small and medium business. The problem is that most businesses in the Kingdom are either government or belonging to ...

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...n the Saudi market, on the other hand, protect those, who already settled in this country and does not want the presence of competitors in their field. In this regard, the government is doing everything possible to protect the Saudi economy from the influx of foreign companies. Despite the strong statements of the government on the promotion of foreign companies in the Kingdom, it is just trying to attract more investments for their own needs .

The main problems facing the economy of Saudi Arabia, one can conclude, is that the state has a policy which aims to protect the kingdom. How long the country will be able to survive in such an environment – it is unknown. However , due to the fall of some regimes in the Middle East and the discontent of the local population, there may be some shifts in favor of opening up and modernization of the economy in the near future.