Jul 5, 2019 in Business

Economy of Saudi Arabia

Economy of Saudi Arabia is a significant player in the international arena and the largest one in the Arab region. It is a centrally planned economy with a strong governmental control. Saudi Arabia became financially prosperous mainly because of its oil trade, which constitutes around 80% of the country’s revenues (The Heritage Foundation, 2013). Nowadays, however, the government of Saudi Arabia promotes diversification of the industry and encourages private sector to develop. These efforts are logical and thoughtful in the light of new world’s trends of sustainability. Despite strongly controlled economy, Saudi Arabia is quite effective in the task of private sector development by establishing special funds, providing education and training, and engaging representatives of various population groups.

The government helps small businesses in Saudi Arabia mainly through various funds and organizations. For example, Saudi Industrial Development Fund provides short term loans to industry investors as a part of the industrialization agenda in the country. Besides financial support, it is also a source of technical support, administrative, marketing and financial consultation. Substitution of imports by local product and encouragement of exports other than in oil industry are among the important objectives of the Fund (Saudi Industrial Development Fund, 2013). As one can see, Saudi Arabia is striving to be a sustainable economy satisfying its own needs with the resources and products produced within its borders. Moreover, it focuses on diversification of exports. Small private enterprises are the first step for achieving this goal, and the government tries to make the environment friendly for doing business.

Another example of similar assistance is Human Resources Development Fund, which has diverse areas of consideration. According to the guidebook to this organization, “the Fund will concentrate on the encouragement, training and employment of Saudis in the private sector” (Human Resources Development Fund, 2013). It implements the objective by focusing on financial support, training and education for both previously-qualified and unqualified workers, monitoring talents of school students, and providing health benefits. Other important factors for private and small business sector development are Saudi Credit & Savings Bank and the Centennial Fund that help Saudi men and women to start their own businesses and achieve independence in them. Saudi Arabia is ranked twenty-second in the 2013 Doing Business Report that measures the ease of doing business for small and medium-sized firms (International Finance Corporation & World Bank, 2013). This means that initiatives done in the country have a visible result.

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As for the role of women in the small business sector and in the economy in general, it gradually increases as women are perceived as part of workforce. Human Resources Development Fund has a special section dedicated to female workers where it describes the ways to incorporate women into the economy, for example, by engaging them in distance work (Human Resources Development Fund, 2013). Other organizations also explicitly state that they provide assistance for both genders. Although the role of women is significantly lower than in other countries around the world, Saudi Arabia is working towards combining wise human resource management and preserving national culture.

Reading official documents and objectives of different organizations, it can be seen that the role of small business in Saudi Arabia is increasing. This sector is seen as important for increased diversification of product and services base as well as satisfying population needs with national products. Logically, small businesses play an important role in Saudi economy and have a great potential to become platforms for innovation and creativity. In addition, small firms are the ones that cater for local populations and by doing that improve the quality of life of an average person. That is why it is not surprising that the officials work towards strengthening this sector.

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