Saudi Arabia's Economic Diversification: A Case Study in Entrepreneurship

Thompson, Kimanthi Ali; Al-Aujan, Dalal Thair; AL-Nazha, Roaa; Al Lwaimy, Sara; Al-Shehab, Sumayah
April 2012
Journal of Management & Business Research;Apr2012, Vol. 2 Issue 2, p37
Academic Journal
Case Study
The Saudi Arabian economy is primarily dependent on a natural resource that is expected to be depleted within the next 20-years. To date, 75% of all Saudi Arabia's revenues are generated from oil & gas exports, so in order for the Saudi economy to reach its goal of sustainability - diversification will play a critical role for success. Forty years ago, Saudi Arabia's leaders developed what have become a series of 5-year economic development plans aimed at achieving diversification by creating new business within major industry sectors that include; communications, economic, health, housing, human resources management, municipal and transportation. The KSA Ninth Development Plan (2010-2014) is a spending initiative worth SR1, 444bn (US$385.2bn) and if successfully implemented the plan will realize an annual GDP growth rate of 5.2% over the current plan's five year life span. Private sector growth will be the main driver for the economic diversification of Saudi Arabia's economy. To date, the majority of new business start-ups in Saudi have come in the form of franchises deriving mainly from existing U.S. business models. Although franchising provides a quick one-stop solution for establishing a business, the issue is that its practice does not provide an adequate foundation for the economic sustainability of a country. In order for Saudi Arabia to achieve economic diversification true Entrepreneurship must begin within the Kingdom where new businesses are created based on innovation, technology and the use of Saudi's valuable resources.


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