The impact of the economic crisis in the Saudi economy Dissertation

The impact of the economic crisis in the Saudi economy - Dissertation Example The project deals with the impact of economic crisis in Saudi Arabia. Saudi Arabia is a key player in the scenario of international trade, imports and exports. The effect of the economic crisis in Saudi Arabia has been compared with the impacts on the leading economies of the world which provides a comprehensive picture of the global effects of the economic crisis. Introduction Saudi Arabia is an absolute monarchy and is ruled by King Abdallah Bin Abdul Aziz Al Saud who promises of greater political participation and has been able to win the confidence of majority of the Sunni population. The economy of Saudi Arabia is based on its rich amount of oil reserves. Oil is the main resource of the economy. The country possesses around 18% of the proven reserves of petroleum in the world. Saudi Arabia is also the leading exporter of petroleum in the world. Saudi Arabia because of its rich reserves of petroleum plays the leading role in the Organisation for Oil Exporting countries. . The OPE C was created in order to ensure a steady income of the members of the organisation and also to secure the supply of oil to the consumer states all over the world. The economy of Saudi Arabia was initially dependent on agricultural with the work of agriculture one by the nomadic people who lived in the country. The discovery of oil in the country occurred in 1930 from where the kingdom of Saudi Arabia started to gain comparative advantage over the other countries in the world. According to World Bank, Saudi Arabia’s economy has been referred to as the strongest economy among the Arab nations. Thus the economy of Saudi Arabia underwent a transition from an agriculture based economy prior to 1930 to an industrial economy after the discovery of oil in 1930. The GDP grew at rapid rates due to availability of huge proven reserves of petroleum and gaining comparative advantage which led to rise in exports. The country’s foreign exchange reserves grew enormously giving a scop e for developments of infrastructure for industries in the kingdom. As a result of the recent economic crisis all over the world and reduction in GDP per capita of Saudi Arabia, the government has undertaken policy reforms of diversification of the economy, strengthening the regulatory framework and the legal system and allowing foreign investments in order provide employments opportunities to the swelling population and also to sustain their economic growth rates. The impacts of the economic crisis in the economy of Saudi Arabia lay its roots in the recession that occurred in US and subsequently spread to major economies like UK and other parts of the world thereby transforming into a global financial meltdown. The international economic scenario underwent radical changes with recession in the economy of US and its subsequent effects on the economies all over the world. This created major impacts in the economies of the world including that of western economies like, European natio ns, East Asia and partly in South Asia. The financial crisis which emerged in the year 2007 started with a bubble in 2002 in the housing