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2020-11-13 Arabia
Saudi Crown Prince says he is working on doubling the size of the Kingdom’s economy and diversifying it away from reliance on oil
[PUBLISH.TWITTER]
Posted by Fred 2020-11-13 00:00|| || Front Page|| [11133 views ]  Top
 File under: Govt of Saudi Arabia 

#1 Yeah, you do that, princey wincy.
Posted by Clem 2020-11-13 00:59||   2020-11-13 00:59|| Front Page Top

#2 Lumber, Coal, Wind Farms ?
Posted by Besoeker 2020-11-13 01:03||   2020-11-13 01:03|| Front Page Top

#3 Cas1nos and Camel Races!
Posted by magpie 2020-11-13 02:24||   2020-11-13 02:24|| Front Page Top

#4 Hourglasses? Mighty green. Supercar junkyard?
Posted by Angereck Brown4437 2020-11-13 03:41||   2020-11-13 03:41|| Front Page Top

#5 Just missed that opportunity by 45 years. The biggest Saudi exports (oil and terrorism) are both at the bottom of their markets. But no worries Joe Biden will get that turned around quickly.
Posted by Airandee 2020-11-13 06:38||   2020-11-13 06:38|| Front Page Top

#6 Sand and Islam
Posted by Bob Grorong1136 2020-11-13 07:32||   2020-11-13 07:32|| Front Page Top

#7 The revision began some time ago with the creation of the huge Yanbu complex. More recently there has been talk of creating a tourist complex south of the Straits of Tiran where scuba divers considered its waters the equal to Ras Mohammed in Sinai or Hurdagha in Egypt.
Posted by b 2020-11-13 07:39||   2020-11-13 07:39|| Front Page Top

#8 Glass production
Posted by Phusosh Brown8922 2020-11-13 08:27||   2020-11-13 08:27|| Front Page Top

#9 This is more complex than most people can mentally handle. Really.

I’m going to explain this is extremely simplistic terms due to today’s 30 second attention span and 140 character tweet limitations. Which is truly a mind numbing concept….. as precisely when mankind’s technology is becoming exponentially more complex, we as humans have inexplicably shortened our own ability to discuss its impact. It’s a process that is designed to crash….. My long term advice is to simply drink heavily……

Back to understanding Saudi’s economy and its stated objective to diversify away from oil. As if diversity is simply a choice. It isn’t. The ability to diversify is baked into a country’s geological resources and also it geolocation that determines its climate. In simple words the country’s resource base and its climate.

Saudi’s oil reserves and its size of its fields determine its profitability. Saudi produces 95% of its oil from approx. 9 major fields. They are giant formations. Its remaining untapped and non-producing reserves are essentially 60 plus small polka-dot fields widely dispersed. Its low marginal cost of production is due to these huge existing fields (Ain Dar, Shedgum, Udahilyah, Safaniyah, Abqaiq, Shaybah etc.) flowing day in and day out. The vast bulk was put on line way back in the 50’s and it hasn’t really changed much. But to add productive capacity it needs to tap into many small, widely dispersed fields. Not a good long term prospect.

These large fields have low marginal costs of production, down as low as 1 to 2 dollars per barrel. Even a sales price of $40 yields a huge rate of return. For simplicity sake her, lets say it 1000% rate of return. Now if you are a Saudi private businessman looking to invest your money, where would you invest it? Your choices are
1) Aramco (and that’s only recently been made an option)
2) Oil service sector businesses that keep Aramco functioning like pipes, valves, drilling services, training, IT for the oil sector etc.
3) Bakery
4) Supermarkets
5) Banking
6) etc. etc.

Investing in oil gets you 1000% rate of return, while all other investment options yield anywhere from 2% to 25%. What Saudi economic sector would you put your next million dollars if your were one of the many Saudi private business investors being asked to help diversify the domestic economy..... ?

Diversifying away from a major part of the Saudi economy that yields 1000% rate of return is essentially an impossibie choice. Why would you choose to invest in anything else that doesn’t even come close to the rate of return that one can get in Saudi’s geologically fortuitous oil sector.

Saudi’s economy has supermarkets, construction companies, bakeries and all sorts of other supportive businesses, but to actually create businesses that can compete with OTHER foreign country’s existing export businesses is really an exercise in failure. Think about it. Can Saudi make furniture cheaper and better quality that China? Where will Saudi get its wood, steel, chrome, glass, etc at a lower cost than what China or Malaysia or Thailand can obtain it. Then there’s the labor costs….. Can Sudi suddenly be a player in software development, or farming, or education, or car manufacturing?

Diversity is NOT a choice that one can simply make happen with a wave of one’s hand. If it were possible, then why isn’t every nation on earth diverse. Fish farming in Switzerland, ship making in Austria, micro-chip manufacturing in Senegal.

There are other economic factors such as Ricardo’s “Comparative advantage” (not competitive but “comparative”) This concept is one of economics’ most misunderstood theories. It’s even more important than Adam Smith’s “invisible hand” in supply and demand. Yes…. More important! If your really want to test your intellect, try understanding this 1817 concept…. Wiki it. Then you will realize how impossible it will be for Saudi to actually diversify it economy.
Posted by Ospas Dhahran 2020-11-13 12:34||   2020-11-13 12:34|| Front Page Top

#10 The ability to diversify is baked into a country’s geological resources and also it geolocation that determines its climate. In

Oh, really (writing from Israel)?
Posted by g(r)omgoru 2020-11-13 13:07||   2020-11-13 13:07|| Front Page Top

#11 Certainly natural resources and climate are baked in, but some countries like Israel, Hong Kong and Singapore have managed to cobble together a pretty decent economy despite their handicaps.

I would expect the biggest limiting factor in trying to diversify the economy would be Saudis themselves and their poor work ethic.
Posted by SteveS 2020-11-13 14:16||   2020-11-13 14:16|| Front Page Top

#12 Culture is key.

I'm really not disagreeing with a lot of the premise, but we have also seen certain regions flourish or famine depending upon who is in charge.

The Lower Nile is well documented as prosperity depending upon who is in charge and what the people believe; Spain as well.

Both Venice and Hong Kong were swampy shitholes until industrious and motivated people moved in.
Posted by swksvolFF 2020-11-13 16:53||   2020-11-13 16:53|| Front Page Top

#13 make the desert kaboom!
Posted by Thumper Phusomble5892 2020-11-13 17:24||   2020-11-13 17:24|| Front Page Top

#14 China & Saudi Arabia to build $5.6 billion Petrochemicals Plant. www.beltandroad.news › Jan 8, 2020 — The Plant would be located in Yanbu industrial city on the Red Sea Coast ... It can contribute to creating scores of industrial investment opportunities.
Posted by b 2020-11-13 17:49||   2020-11-13 17:49|| Front Page Top

#15 ^Saudis won't work. And, if it employs Pakistanis, I expect a kaboom.
Posted by g(r)omgoru 2020-11-13 17:59||   2020-11-13 17:59|| Front Page Top

13:20 Skidmark
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