The analysis will be based on the case study of transformation that has taken place in Saudi Arabia. The impact of monarchy on the economic development of Saudi Arabia will also be a major part of the analysis. The analysis will provide details regarding the political issues that are being faced by individuals in Saudi Arabia and their impact on the economy. The reforms being implemented by Muhammad Bin Salman will be a part of the analysis. The impact of privatization of the state-owned oil organization will be analysed in detail. The issues related to lack of basic rights of women and the autocratic nature of the government will also be discussed in a detailed manner.
Desert kingdom of Saudi Arabia is considered a total monarchy that has developed laws based on the interpretation of the religious text named Quran which is a holy book of the Islam religion. The economy of Saudi Arabia had performed quite well as the overall GDP of the country was around 54,500 dollars which is not quite lower than the overall GDP of the United States in the same year. Around 87 percent of total revenues gained by the government of Saudi Arabia was based on the oil sector and 42 percent of the GDP along with 90 percent of the total export earnings were also provided by oil sector of the country. The economy of Saudi Arabia is thereby highly dependent on the oil exports that are made to various countries in the world (Economist.com, 2022).
The overdependence of the country on oil sector had a huge impact on the economic condition of Saudi Arabia when the oil prices had collapsed in 2014. The government surplus was also totally erased due to lack of earnings and increasing debts as well. The economic situation of Saudi Arabia had however increased after the rise of oil prices in the years 2017 and 2018. The crisis that was depicted in the economic condition of Saudi Arabia due to fall in oil prices was able to show the vulnerabilities that are a part of the economy of the country (Al-Tit, Omri and Euchi 2019). The levels of unemployment among the huge young population of Saudi Arabia were also quite huge and these had an impact on the social unrest that was caused in the country. The jobs that were present outside the government sector were also not provided to the local population as the private organizations mainly recruited low-paid foreign employees for fulfilling their needs (Aliedan 2022).
Salman bin Abd al-Aziz Al Saud became the king of Saudi Arabia after his brother died in 2015. Salman bin Abd al-Aziz Al Saud however transferred the crown to his son Muhammad Bin Salman who became the crown prince. The vision developed by Muhammad Bin Salman was quite different from the previous kings in Saudi Arabia. The first decision that was made by Muhammad Bin Salman was mainly related to privatization of Saudi Aramco which is a major oil company of the country. The crown prince also decided to reduce the water and energy subsidies and enhancing the growth of private sector (Bloomberg.com, 2022). The prince made an investment of 500 billion dollars in the new city named NEOM, that would mainly serve as the hub for foreign and private investment. Muhammad Bin Salman also introduced the value-added tax for reducing the levels of government deficit. The stiff moral codes were also loosened and the prince also aimed at improving the cultural lives of people in Saudi Arabia. The major issue that was faced by Muhammad Bin Salman regarding implementation of the vision was related to resistance that was provided by members of royal family (Belloumi and Alshehry 2018).
Muhammad Bin Salman thereby removed the royal family members from various positions in the government with the aim of consolidating his power. The huge anti-corruption sweep that was implemented by the prince led to arrests of many powerful princes who were a part of the kingdom. The reduction of government subsidies was also faced by major levels of resistance from the population and the reform was not implemented effectively by the prince (Ft.com, 2022). A major impact of the reforms was that the strict laws had been relaxed and women were provided with some independence as well. However, a major incident that had taken place regarding the death of an American journalist named Jamal Khoshoggi had a negative impact on the image and power of the crown prince (Arabnews.com, 2022).
The privatization of Saudi Aramco can provide some major benefits to the economic condition of Saudi Arabia. Privatization will be able to play a major role in development of an effective alliance between the capital investors and the regime apparatus. The government will also be able to create jobs outside oil industry as the kingdom is pursuing the ambitions related to diversification that were formed by Crown Prince. Privatization of the state-based organizations can have a long-term impact on the people who are a part of the kingdom (Nytimes.com, 2022). The young population of Saudi Arabia will also be influenced positively by the job opportunities that can be provided to them in the private sector and further can be helpful in fulfilment of Vision 2030 that was set by the Crown Prince. The heavy investments that are being made by Aramco in the downstream projects related to gas and oil can have a huge impact on the jobs that will be created in the country within the private sector. The ambitions related to diversification that has been set by the organization can be easily fulfilled with the support that is mainly provided by the privatization of the most significant state-owned organization of Saudi Arabia (Haque 2021).
The government of Saudi Arabia has faced major allegations regarding the violation of women’s rights and this has a huge impact on the image that has been formed by the country in the business environment. The reforms that have been implemented by the Crown Prince are also able to provide some freedom to women as they have been allowed to drive and to attend social gatherings like watching movies. The international businesses can take the aspects of development into consideration for the purpose of making investments in Saudi Arabia (Arabnews.com, 2022). Although the Crown Prince was successful in improving the entertainment industry, the government also made arbitrary arrests of the activists, dissidents, members of the royal family and the intellectuals. The management of international organizations need to understand the steps that are being taken by the government into consideration for developing their strategies properly. The impact that decisions of the government can have on the organizational strategies can be considered before making investments in the country (Kumar, Haque and Venugopal 2019).
The image of Saudi Arabia that is mainly related to the lack of importance provided to Human Rights can have an impact on the investments that can be made by the international business organizations. The government spent huge amounts of money in hosting the major cultural, sporting and entertainment events with the aim of improving image of the organization related to Human Rights violation in the country. The murder of the Washington Post journalist named Jamal Khashoggi by the Saudi agents in the year 2018 was a major issue that influence the image of Crown Prince in a huge manner. The morality levels of the decision made by international businesses related to investments that can be made in Saudi Arabia will be based on the image that has been formed by the country (Wsj.com, 2022).
The human rights violations made by the government will be a major factor that can also have an impact on the image of international organizations that are planning to invest in Saudi Arabia. Although the Vision 2030 developed by the Crown Prince of Saudi Arabia was suitable for people of the country on a long-term basis, the decisions made by international business organizations can be based on the issues that are faced by citizens regarding lack of human rights. The autocratic nature of the government can also influence the operations and strategies being implemented by the international organizations (Siddiqui et al. 2021).
Conclusion
The report can be concluded by stating that the steps that are being implemented by the Crown Prince of Saudi Arabia can have a positive influence on the citizens of the country on a long-term basis. However, the negative image that has been formed by Saudi Arabia due to the various steps being implemented by the government related to arrests of people can affect the decisions that can be made by international business organizations.
List of References
Aliedan, M., 2022. The Geopolitics of International Trade in Saudi Arabia: Saudi Vision 2030. Cuadernos de Economía, 45(127), pp.11-19.
Al-Tit, A., Omri, A. and Euchi, J., 2019. Critical success factors of small and medium-sized enterprises in Saudi Arabia: Insights from sustainability perspective. Administrative Sciences, 9(2), p.32.
Arabnews.com, 2022. The privatization plan is still on. [online] Arab News. Available at: <https://www.arabnews.com/node/1710096#:~:text=In%20the%20biggest%20privatization%20transaction,privatization%20plan%20in%20Saudi%20Arabia.> [Accessed 29 March 2022].
Belloumi, M. and Alshehry, A., 2018. The impacts of domestic and foreign direct investments on economic growth in Saudi Arabia. Economies, 6(1), p.18.
Bloomberg.com, 2022. Bloomberg – Are you a robot?. [online] Bloomberg.com. Available at: <https://www.bloomberg.com/news/articles/2021-04-21/saudi-arabia-seeks-to-speed-privatizations-to-help-ease-deficit> [Accessed 29 March 2022].
Economist.com, 2022. Saudi Arabia’s unprecedented shake-up. [online] The Economist. Available at: <https://www.economist.com/middle-east-and-africa/2017/11/05/saudi-arabias-unprecedented-shake-up> [Accessed 29 March 2022].
Ft.com, 2022. The privatisation of Saudi Aramco. [online] Ft.com. Available at: <https://www.ft.com/content/45295af2-bff6-11e6-9bca-2b93a6856354> [Accessed 29 March 2022].
Haque, M.I., 2021. Do Oil Rents Deter Foreign Direct Investment? The Case of Saudi Arabia. International Journal of Energy Economics and Policy, 11(1), p.212.
Kumar, N.S., Haque, M.I. and Venugopal, K., 2019. Employment challenges in Saudi Arabia: an attitudinal study. Entrepreneurship and Sustainability Issues, 6(4), pp.1637-1646.
Nytimes.com, 2022. It Wasn’t Just Khashoggi: A Saudi Prince’s Brutal Drive to Crush Dissent (Published 2019). [online] Nytimes.com. Available at: <https://www.nytimes.com/2019/03/17/world/middleeast/khashoggi-crown-prince-saudi.html> [Accessed 29 March 2022].
Siddiqui, K.A., Al-Shaikh, M.E., Bajwa, I.A. and Al-Subaie, A., 2021. Identifying critical success factors for university business incubators in Saudi Arabia. Entrepreneurship and Sustainability Issues, 8(3), p.267.
Wsj.com, 2022. Saudi Arabia Plans Record Spending in New Budget. [online] WSJ. Available at: <https://www.wsj.com/articles/saudi-arabias-budget-deficit-narrows-1513678773> [Accessed 29 March 2022].
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download