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

  • J. W. WrightJr
  • Muhktar M. Ballool


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


International Monetary Fund Saudi Arabia Absorptive Capacity Business Policy Foreign Labour 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Notes and References

  1. 2.
    Saudi Arabian Monetary Agency (SAMA), Annual Report 1979 (Saudi Arabia: SAMA, 1979).Google Scholar
  2. 3.
    B. M. Hela, ‘The Depletion of Exhaustible Resources: Some Theoretical Issues’, in M. Parkin and R. Nobay, (eds), Issues in Contemporary Economics (Manchester: Manchester University Press, 1974), p. 211.Google Scholar
  3. 4.
    Ministry of Planning, Second Development Plan: 1975–1980 (Riyadh: Ministry of Planning, 1975).Google Scholar
  4. 5.
    Kingdom of Saudi Arabia, Wadi Jizan Land and Development Project (Riyadh: Ministry of Agriculture and Water, 1959).Google Scholar
  5. 6.
    The United Nations, Studies on Development Problems in Selected Countries of the Middle East (New York: The United Nations, 1974), p.25.Google Scholar
  6. 7.
    Jean Paul Cleron, Saudi Arabia 2000 (London: Croom Helm, 1978), p.49.Google Scholar
  7. 8.
    David Edans and William Snavely, ‘Planning for Economic Development in Saudi Arabia’, Middle East Journal, Winter 1970, p. 18.Google Scholar
  8. 9.
    Ministry of Planning, Second Development Plan: 1975–1980 (Riyadh: Ministry of Planning, 1976), pp. 3–4.Google Scholar
  9. 11.
    Ziauddin Sardarm, ‘Saudis Warm to Solar Energy’, Nature, 29 June 1978, pp. 700–1.Google Scholar
  10. 12.
    John Whelan, ‘Ports’ Chief Defies Shippers to Raise Unilaterally’, Middle East Economic Digest, 25 August 1978, pp. 10–11.Google Scholar
  11. 13.
    Ramon Knauerhase, The Saudi Arabian Economy (New York: Praeger, 1975), p. 66. This figure was significantly lower then the 90 per cent of ten years earlier.Google Scholar
  12. 14.
    N. Fallen, Middle East Oil Money and its Future Expenditure (London: Graham & Trotman, 1975).Google Scholar
  13. 15.
    Saudi Arabian Monetary Agency, Annual Report (Riyadh: SAMA, 1979), p. 167.Google Scholar
  14. 17.
    Yusif A. Sayigh, The Economics of the Arab World (London: Croom Helm, 1978), p. 146.Google Scholar
  15. 19.
    Ministry of Planning, Third Development Plan, 1980–1985 (Riyadh: Ministry of Planning, 1980).Google Scholar
  16. 20.
    The Industrial Studies and Development Center, A Guide to Industrial Investment in Saudi Arabia, 5th edn (Riyadh: The Industrial Studies and Development Center, 1977), pp. 14–15. See also: City Bank, Investment Guide to Saudi Arabia (Riyadh: Citibank, 1975), p. 10.Google Scholar
  17. 21.
    Metra Consulting, Saudi Arabia: Business Opportunities I and II (London: Metra Consulting, 1975 and 1979).Google Scholar
  18. 23.
    Industrial Studies and Development Center, Industrial Structure and Development in Saudi Arabia (Riyadh: The Industrial Studies and Development Center, 1977), p. 17.Google Scholar
  19. 28.
    International Monetary Fund, International Financial Statistics, vol. xxixx, no. 9 (Washington, DC: International Monetary Fund, September 1976).Google Scholar
  20. 30.
    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
  21. 31.
    R. S. Eckans, ‘Absorptive Capacity as a Constraint Due to Maturation Processes’, in J. Bhagwati and R. S. Eckans (eds), Development and Planning (Cambridge, MA: MIT Press, 1972), pp. 79–108.Google Scholar

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

Personalised recommendations