International Relations and Saudi Arabia: Economic Analysis Report

This report provides an economic analysis of Saudi Arabia, examining the country's major opportunities, such as its vast oil and gas reserves and well-established infrastructure, which attracts investors. The report also identifies key challenges, including the subsidization policy and the impact of political instability, particularly from neighboring conflicts and internal social issues like restrictions on women's education and drug addiction among youth, which threaten the country's future workforce. The report highlights the economic challenges of diversifying the economy, requiring significant initial investments, and discusses the impact of political instability on the oil market. Furthermore, it explores social challenges, such as limited opportunities for women in the workforce, and considers the long-term implications of these issues on the country's economic development. The report references Bremmer (2015) and Yeo, Stubbs & Barrett (2016) to support its analysis.

Running head: INTERNATIONAL RELATION AND GLOBAL ECONOMY 1
International relation and global economy
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INTERNATIONAL RELATION AND GLOBAL ECONOMY 2
Major opportunities
One of the significant opportunities is the existence of vast reserves for oil and gas. These
large reserves supply oil from the start of the year up to the last day in the year. Therefore the oil
reserves play a vital role in such a way that the country has never encountered any problems
about the oil becoming scarce at one point(Yeo, Stubbs & Barrett, 2016). More so. The well-
established infrastructure has favored transportation of the oil directly from the oil fields to the
market centers. The excellent transport system has attracted investors to open up factories in
Saudi Arabia. Another opportunity is the existence of a favorable working environment. The
excellent working environment facilitates efficiency and effectiveness during the production
process, and it also attracts different investors.
Major challenges
The major challenge facing Saudi Arabia is the subsidization policy, where the
government of Saudi Arabia pays some amount of money during the production process of the
oil in order to keep the prices of oil as low as possible (Yeo, Stubbs & Barrett, 2016). This policy
is not good on the side of the government, mainly because it increases the productions costs,
although the oil extracted is sold at a low price. Another challenge is that the oil business lies
between the low and high ends within the market segments.
Political challenges
The political instabilities in Saudi Arabia cause a significant threat to the economy of this
particular country. The political instabilities significantly affect the prices at which the oil is
being sold, which affects the overall revenue generated within a specific period. The political

INTERNATIONAL RELATION AND GLOBAL ECONOMY 3
instabilities also reduce the global demand for oil in such a way that traders feel insecure about
conducting their businesses in Saudi Arabia. Furthermore, the wars in Syria and Yemen have
significantly impacted Saudi Arabia being a neighboring country (Bremmer, 2015). These wars
create insecurity scenarios for the people living in Saudi Arabia, and thus, other citizens have
decided to run away from their motherland country.
Economic challenges
Economic wise, diversifying the economy into other sectors can lead to increased
expenditures mainly the initial stages of any new business does not involve profits, but profits
are realized as the business gains more market shares after its establishment (Yeo, Stubbs &
Barrett, 2016). Furthermore, the establishment of new infrastructure also needs a lot of money,
most notably for purchasing the machines and equipment to be used.
Social challenges
Social wise, women are not allowed to study some subjects in schools, and these subjects
are biology and chemistry. Therefore women are denied the chance to work in the oil and gas
sector mainly because the knowledge obtained from both Chemistry and Biology is relevant to
the oil and gas sector. Besides, most young people in Saudi Arabia are drug addicts hence do not
participate in the development process of their country. At one time in the future, Saudi Arabia is
likely to run short of manpower mainly because women are not allowed to participate in some
activities and also that the number of drug addicts will have increased.

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References
Bremmer, I. (2015). These five facts explain Saudi Arabia's challenging 2015. Retrieved from
https://time.com/4154201/these-5-facts-explain-saudi-arabias-challenging-2015/
Yeo, R., Stubbs, J., & Barrett, M. (2016). Team-Based Knowledge Sharing: Learning Through
Complex Work Challenges. International Journal Of Human Resource Development:
Practice, Policy & Research, 1(1), 65-83. doi: 10.22324/ijhrdppr.1.106