Diversification in the Non-Oil Sector of Saudi Arabia: An Analysis of Saudi Vision 2030

ASSESSING THE EXTENT OF DIVERSIFICATION IN THE
NON-OIL SECTOR OF THE ECONOMY OF SAUDI ARABIA
& ANALYSING IT IN LIGHT OF SAUDI VISION 2030
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Abstract
The paper is based upon the objective of analysing the extent of diversification in the
non-oil sector of Saudi Arabia and testing the feasibility of the Saudi Vision 2030 in light of
the findings. It is been found that the major plinth of economic sustenance in case of Saudi
Arabia is the oil sector. However, the recent drop in the prices of oil have led to the
importance of developing alternative means and sources of production. The significant
biasness of the Saudi Arabian economy requires creation of alternative production platforms
that can contribute to the GDP of the country. To raise the volume of domestic production it
is important to not only boost the oil sector but also the transportation, construction,
government services, manufacturing, tourism,, whole and retail, hospitality sectors in which
the country possess the capability to develop in the near future. The Saudi Vision 2030 is a
plan undertaken to reduce the dependency of the economy of Saudi Arabia over the oil sector
and focus upon creating alternative means of production. The presence of these alternative
sources of production will help in the sustenance of the economy when the oil prices are
found to get lowered significantly as the dependency of the Saudi Arabian economy have
shifted into other sectors also.
The paper delves into this aspect to understand the presence of market diversification
within the non-oil sector of the economy as well as measuring the segments within the non-
oil sector that can grow significantly in the near future. All of these finding are then studied
coupled with the Saudi Vision 2030, which helped in understanding the feasibility of the
reform plan as well as help to anticipate the extent up to which the Saudi Vision 2030 can get
successfully accomplished based upon the exiting scenario of the Saudi Arabian economy.
From the findings it is been found that among the non-oil sector of Saudi Arabia specifically
the financial sector as well as the insurance and real estate sector are booming significantly
overtime followed by ensuring that if infrastructural development is being effectively
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incorporated in this sector then there is high probability that these sectors will be able to
contribute significantly to the national GDP of Saudi Arabian economy. Moreover, the output
gap analysis revealed that there is scope of advancement in the construction,
telecommunication, storage, wholesale, retail, restaurants and hospitality, manufacturing,
government services as well as transportation sectors, however, these sectors lacks in
implementation of effective planned strategies. Moreover, another sector that needs both
technological advancement and significant support from the government is the agricultural
sector of Saudi Arabia. On a precise note, it has been found that there is presence of
alternative production platforms that can support the national economy of Saudi Arabia in
accordance with the Saudi Vision 2030 irrespective of the fact that the decline in the oil
prices or oil market crash would not be able to break the economic axis of the country of
Saudi Arabia if and only if these sectors are effectively pioneered towards development.
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Acknowledgement
I want to convey my heartiest gratitude to all the people who helped me in carrying
out my research. The road towards accomplishment of the research was a wonderful
experience especially due to the gratefulness of my advisor Mr/Mrs
___________________________ and my supervisor Mr/Mrs
___________________________. There guidance as well as support helped me to channelize
my efforts in the rightful direction followed by overcoming the confronted challenges. I am
also thankful to my friends for helping me out in the process of accumulating credible data.
Moreover, the co-operation from my parents and their support in encouraging me in the
process of my research is noteworthy. Last but not the least, I am highly obliged to the
authorities of my institution for giving me the opportunity to contribute my efforts in the field
of the research.
Thanking all of you,
Yours Sincerely,
(Signature)
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Table of Contents
Chapter 1: Introduction..............................................................................................................9
1.1 Introduction.....................................................................................................................9
1.2 Background of the Study......................................................................................................9
1.3 Background of the Non-oil Sector of Saudi Arabia...........................................................10
1.4 Rationale of the study.........................................................................................................11
1.5 Problem statement..............................................................................................................12
1.6 Research aim......................................................................................................................12
1.7 Research objectives............................................................................................................12
1.8 Research questions.............................................................................................................13
1.9 Research Hypotheses.........................................................................................................13
1.10 Significance of the study..................................................................................................14
1.11 Structure of the research study.........................................................................................14
Figure 1: Dissertation Structure...........................................................................................14
Chapter 2: Literature Review...................................................................................................15
2.1 Introduction........................................................................................................................15
2.2 Conceptual framework.......................................................................................................15
Figure 2: Conceptual framework.........................................................................................16
2.3 Understanding the general concept of Saudi vision 2030..................................................16
2.4 Various Non-Oil Sectors:...................................................................................................19
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2.4.1 Herfindl concentration index and the Normalized-Hirschman concentration Index
model:.......................................................................................................................................23
2.10 Summary:.........................................................................................................................24
Gap in the Literature................................................................................................................25
Chapter 3: Research Methodology...........................................................................................28
3.0 Introduction:.......................................................................................................................28
3.1 Research method outline:...................................................................................................28
3.2 Research Onion:.................................................................................................................29
Figure 8: Research onion.....................................................................................................29
3.3 Research Philosophy:.........................................................................................................30
3.3.1 Justification for the chosen research philosophy:...........................................................30
3.4 Research Approach:...........................................................................................................30
3.4.1 Justification for the chosen research approach:..............................................................30
3.5 Research Design:................................................................................................................31
3.5.1 Justification for the chosen research design:...................................................................31
3.6 Research strategy:..............................................................................................................31
3.6.1 Justification for the selection of Research Strategy........................................................32
3.7 Selection of Sampling Methods and Sample size:.............................................................32
3.8 Data collection method:.....................................................................................................32
3.8.1 Secondary Research:.......................................................................................................33
3.9 Data analysis:.....................................................................................................................33
3.10 Research ethical consideration:........................................................................................34
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3.11. Research limitation:........................................................................................................34
3.12 Time horizon:...................................................................................................................34
3.13 Summary:.........................................................................................................................35
Chapter 4: Presentation of the Data.........................................................................................36
4.1 Introduction:.......................................................................................................................36
4.2 Qualitative Analysis...........................................................................................................36
4.2.1 PESTLE Analysis............................................................................................................36
4.3 Quantitative Analysis.........................................................................................................50
5. Recommendation & Conclusion..........................................................................................54
6. Reference list........................................................................................................................60
7. Appendix 1...........................................................................................................................63
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List of Table & Figures
Figure 1: Dissertation Structure...............................................................................................14
Figure 2: Conceptual framework.............................................................................................16
Figure 8: Research onion.........................................................................................................29
Figure 1: PESTLE Analysis of the Non-oil sector of Saudi Arabia........................................48
Figure 2: Herfindl concentration index and the Normalized-Hirschman concentration Index53
Figure 3:Output Gap Analysis.................................................................................................54
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