Diversification of Income Resource in Saudi Arabia as Result Decrease Oil Price Names
The main objective of this paper is to study the idea of diversification of the income resource of Saudi Arabia due to the effects of the instability in the oil market. Saudi Arabia as a country has developed due to its oil source which makes it the kingpin in the world oil market. Approximately 85% of the country revenue is earned from the oil economic sector. This is a sign of over reliance on the oil market making the country economy vulnerable because of changes of oil prices. The instability of the oil prices in the global market has signaled the need for economic diversification to build a stable economy (Shoult, 2006). This paper discusses the possible ideas which can be used to up bring diversified economy which does not depend on a single or few sectors of income generation.
Saudi Arabia is a country that is located in the western part of Asia. It is the world largest producer and exporter of petroleum products. The economy of Saudi Arabia has in the past been pivoted on the oil as source of revenue due to the fact that the strength of the economy, foreign investor’s ideas and development of the infrastructures were all dependent on the oil. Fluctuations in the oil prices and demand in the world market has greatly affected the economy of Saudi Arabia and well as a source of livelihood to the majority of the citizens. The country through its economic experts has been carrying out research that aims at finding the solutions to the instability of the country economy. The findings were to eradicate the economic fluctuations irrespective of the price and demand behavior in the oil world market (Aba Alkhail, 2007). Because of the fluctuation of the oil prices, the country government has encouraged its citizens and foreign investors to diversify in other income generating activities. The diversification has been triggered by the instability of the prices of oil products in the global market. The government as the front runner in the economic control through the ministry economy and planning took the initiative to formulate a long-term plan that would ensure a stable economy.
As a major player in the oil market, the country has been in a position to feel the pinch that resulted from the fluctuation in the prices of the oil and its products. Oil and its by-products require robust machinery and high level of technology for it to be mined and processed for the market consumption. The fall in prices of oil and its product has significantly resulted in massive losses to Saudi Arabia eroding its economy. Through the influence of the government, the country had to initiate the formulation of long term goals that were to save the country economy from going back its knees. The diversification of income resource is observed as possible method of stabilizing the country economy. Diversification of income resource tends to encourage a complete economy segmented into small different sectors. The economy is supported by revenue from very many economic sectors such that failure in one sector does not necessary kill the economy even though its effects are felt.
Objective of the study
This paper seeks to discuss critically and analyze the diversification of the economy in Saudi Arabia as a result of oil price fluctuation.
To reach the aims of the project the following are developed;
i) To conduct a review on the development of the Saudi Arabia since the discovery of the hydrocarbons in the year 1930.
ii) To conduct a critical review on the available theoretical literature dependence on the oil dependence of Saudi Arabia and Diversification patterns put forward.
iii) Formulate and develop suitable techniques of incorporating the diversification in Saudi Arabia.
Background of the study
The economy of Saudi Arabia since the...
References: Aba Alkhail, B. (2007). Essays on oil and business cycles in Saudi Arabia. Manhattan, Kan.: Kansas State University.
Lye, K. (2008). Philip 's world factbook. London: Philip 's.
Shoult, A. (2006). Doing Business with Saudi Arabia. Blue Ibex.
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