Business Policy in an Era of New Prosperity: Strategic Investment Planning from 1970 to 1985

  • J. W. WrightJr
  • Muhktar M. Ballool

Abstract

This chapter is mainly concerned with the investment strategy problems that faced Saudi Arabia in recycling the petrodollar surpluses that accrued to the Kingdom in the 1970s as a result of price hikes following the OPEC embargo. The embargo happened in the midst of the country’s first Five Year Development Plan, drastically altering the implementation of that plan and setting up completely new dynamics for writing investment objectives into the next two plans. Several issues complicated the investment planning process, not least of which was the fact that until then, and indeed until the late-1980s, the economy of Saudi Arabia had depended on a single, exhaustible natural resource as its sole source of income. In 1970, 80 per cent of Saudi GDP and 99.83 per cent of the government’s revenues were earned through the sale of oil and related gas by products.2 The government’s dependency on oil sales forced planning officials to question whether the exhaustible resources were being depleted too rapidly.3

Keywords

Petroleum Uranium Income Marketing Flare 

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Notes and References

  1. 2.
    Saudi Arabian Monetary Agency (SAMA), Annual Report 1979 (Saudi Arabia: SAMA, 1979).Google Scholar
  2. 3.
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  4. 5.
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    The United Nations, Studies on Development Problems in Selected Countries of the Middle East (New York: The United Nations, 1974), p.25.Google Scholar
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    Economist use ‘absorptive capacity’ in a variety of ways and it is helpful to differentiate between capital-absorptive capacity and expenditure-absorptive capacity. I will consider only the concept of capital-absorptive capacity, which is defined for an oil-based economy in John H. Adler, Absorptive Capacity: The Concept and Its Determinations (Washington, DC: The Brookings Institution, 1975).Google Scholar
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Copyright information

© Saudi Arabian Cultural Mission to the United States 1996

Authors and Affiliations

  • J. W. WrightJr
  • Muhktar M. Ballool

There are no affiliations available

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