Description of Saudi-Arabia’s economy
At the time of its establishment on 23rd of September 1932, an extremely underdeveloped, nomadic economy loaded with feudal and tribal cramps was typical of the Kingdom of Saudi-Arabia. The most considerable financial resources were those from pilgrimages.
Launching the exploration and production of oil brought the decisive turning point in the economy of the country. Besides oil, Saudi-Arabia has quite considerable resources of minerals: native salt, iron ore, copper and silver.
According to official data, the oil resources of Saudi-Arabia now come to 261.9 MD barrels, which makes up the 23 % of the present resources of the world. Concerning known natural gas resources, the country takes the fifth place in the world. Resources come to 170 thousand MD cubic metres. Oil production, initially (1933) started mainly by the concession agreements with American firms, was gradually stopped by the goverment of Saudi-Arabia by 1978, and the whole oil and gas business was brought under the control of ARAMCO, a state firm. Saudi-
Arabia is the founder of OPEC. Through this organisation, Saudi-Arabia plays an important balancing role in the prevention of moves on the hectic oil market.
The huge incomes from oil, together with the determined and predictable economic policy of the Saudi government have entailed a significant modification of the structure of economy in the past nearly 60 years. The rate of private capital in the economic life of Saudi-Arabia has gradually increased and by now it has exceeded 60 %. The performance of the economy as a whole, however, still largely depends on the volume of the income from oil since it is still the state which is durably the largest orderer. The reformation of the extensive structure of industry requires structural changes, the aim of which is the development of branches of industry representing modern high added value. To achieve this goal, the Saudi government has made considerable reform steps over the past few years. In their economic relations, apart from the traditional US orientation, they wish to develop the integral political and economic relations, established with the Gulf states and extend their relations with the EU and Asia.
Despite the fact that a considerable part of the territory of Saudi-Arabia is unsuitable for agricultural production, the government has been making a lot of efforts to increase the size of cultivated areas.