Saudi Arabia continues to evolve and diversify its economy and has undergone many changes in recent years.
Saudi Arabia has an oil-based economy with strong government control over major economic activities. Saudi Arabia possesses 18 per cent of the world’s proven petroleum reserves, ranks as the largest exporter of petroleum, and played a leading role in OPEC for many years.
The petroleum sector accounts for almost all of Saudi government revenues, and export earnings. Most workers, particularly in the private sector, are foreigners. Proven reserves, according to figures provided by the Saudi government, are estimated to be 260 billion barrels (41 km3), about one-quarter of world oil reserves.
As of August 2009 it was reported that Saudi Arabia is the strongest Arab economy, according to World Bank.
That is a far cry from the Saudi Arabia that existed prior to the 1930s, an economy based on subsistence agriculture by a population that was largely nomadic and very poor until the discovery of oil in the 1930s. An oil crisis in 1973 marked a significant change in fortunes and Saudi began to grow rapidly and peaked around 1980.
During the 1973 oil crisis OPEC production cuts raised the price of petroleum from $3 per barrel to nearly $12. Saudi became one of the fastest-growing economies in the world, with government revenues available for development, defense, and aid to other Arab and Islamic countries.
With fluctuating oil prices creating economic instability, the Saudi government has sought to allocate its petroleum income to transform its relatively undeveloped, oil-based economy into that of a modern industrial state while maintaining the kingdom’s traditional Islamic values and customs. Although economic planners have not achieved all their goals, the economy has progressed rapidly.
Heavy dependence on petroleum revenue continues, but industry and agriculture now account for a larger share of economic activity. The mismatch between the job skills of Saudi graduates and the needs of the private job market at all levels remains the principal obstacle to economic diversification and development; about 4.6 million non-Saudis are employed in the economy.