Question

The seven criteria for describing a nation’s economy. Using these seven criteria, develop a profile of Saudi Arabia. Discuss what implications does this profile have for marketing opportunities in the country?

·            Type of economy. Is the nation an advanced industrial state, an emerging economy, a transition economy, or a developing nation?

·            Type of government. Is the nation ruled by a monarchy, a dictatorship, or a tyrant? Is there an autocratic, one-party system? Is the nation dominated by another state, or is it a democracy with a multiparty system? Is it an unstable or terrorist nation?

·            Trade and capital flows. Is the nation characterized by almost completely free trade or incomplete free trade, and is it part of a trading bloc? Is there a currency board, or are there exchange controls? Is there no trade, or does the government dominate trade possibilities?

·            The commanding heights (e.g., the transportation, communications, and energy sectors). Are these sectors state owned and operated? Is there a mix of state and private ownership? Are they all private, with or without controlled prices?

·            Services provided by the state and funded through taxes. Are pensions, health care, and education provided? Pensions and education but not health care? Do privatized systems dominate?

·            Institutions. Is the nation characterized by transparency, standards, the absence of corruption, and the presence of a free press and strong courts? Or is corruption a fact of life and the press dominated by the government? Are standards ignored and the court system compromised?

·            Markets. Does the nation have a free market system characterized by high-risk/high-reward entrepreneurial dynamism? Is it a free market that is dominated by monopolies, cartels, and concentrated industries? Is it a socialized market with cooperation among business, government, and labor (but with little entrepreneurial support)? Or is planning, including price and wage controls, controlled by the center.

Answer 1

Type of economy - Saudi Arabia is an economy fueled by enormous revenues from oil exports. Industrialisation in Saudi Arabia has seen a steady development. The recent example of which is Saudi vision 2030 which aims to help the country join the rank of industrialised nations.

Saudi Arabia is a monarchy ruled by the Al saud, a family established by its support for Wahhabi religious establishment.

Saudi Arabia acceded to WTO in 2005. It is the founding member of OPEC and is party to a number of free trade agreements and FTA negotiations conducted by the economic bloc. It has a fixed exchange rate system pegged to the US dollar

That's economy is a mix of private and state ownership with 40% of GDP arising out of the private sector. Most of the private sector dominates construction and real estate but from 2013 several key services were privatised like water supply, telecommunications, electrocuted etc.

There are no personal income taxes in Saudi Arabia but social security payments and capital gains taxes to be paid. Healthcare to Jr's citizens is provided for free and education up-to high school is open to everyone and is free with only day school and not co-educational.

The corruption perception index ranked Saudi Arabia at 53. There exist myriad problems with dismal Human Rights records, severe restrictions on journalists and political activists. The legal system is based on sharia law.Judiacial corruption is a problem in land disputes and cases related to the royal family in which cases judges yield to royal pressure.

Saudi Arabia has adopted a free market system and the private sector accounts for 48% of GDP. According to the 2019 Global entrepreneurship monitor report 76.3% of of the adult population in Saudi Arabia has perceived good opportunities to start a business– with the percentage ranking second highest out of 49 countries analyzed.