economic diversification
Economic Diversification
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Introduction
In Middle East, the Saudi Arabia telecom industry is the largest with over fifty million mobile phone subscribers. At the end of 2011, the mobile penetration was about 188% with the sector enjoying stable growth. Saudi Arabia is the world’s largest oil exporter with oil being its largest income earner. However, to avoid the overreliance on the oil sector, the government of Saudi Arabia has been embarking on measures to diversify the economy through investments in other sectors as well as privatization of some industries. Their efforts have been successful and the telecommunication industry have benefitted from this diversification with a good growth rate which seems to be sustainable in the future. The United Arab Emirates on the other hand has had an unstable growth rate in their telecommunication industry. This paper compares the telecommunication industries of Saudi Arabia and United Arab Emirates and shows how economic diversification has been successful in growing the non oil sectors in Saudi Arabia. In addition, recommendations will be provided on improving the telecom sector of the UAE.
Introduction to Saudi Arabia and its Economic development
Saudi Arabia occupies the largest part of Arabian Peninsula, it is located on a 1,960,582 sq km area most of it being a desert. Saudi Arabia hosts about twenty eight million citizens with more than 80% living in the urban areas. 90% of its citizens are Muslim Arabs (Saudi Arabia, 2001). Saudi Arabia hosts Median and Mecca which are the holiest cities of Islam. Saudi Arabia enjoys an oil based economy with the government controlling the major economic activities in that although private entrepreneurs exist, they are heavily regulated by the government. Its petroleum sector accounts for about 55% of its GDP and around 45% of the budget revenues. 40% of its GDP comes from the private sector
Name:
Institution:
Course:
Tutor:
Date:
Introduction
In Middle East, the Saudi Arabia telecom industry is the largest with over fifty million mobile phone subscribers. At the end of 2011, the mobile penetration was about 188% with the sector enjoying stable growth. Saudi Arabia is the world’s largest oil exporter with oil being its largest income earner. However, to avoid the overreliance on the oil sector, the government of Saudi Arabia has been embarking on measures to diversify the economy through investments in other sectors as well as privatization of some industries. Their efforts have been successful and the telecommunication industry have benefitted from this diversification with a good growth rate which seems to be sustainable in the future. The United Arab Emirates on the other hand has had an unstable growth rate in their telecommunication industry. This paper compares the telecommunication industries of Saudi Arabia and United Arab Emirates and shows how economic diversification has been successful in growing the non oil sectors in Saudi Arabia. In addition, recommendations will be provided on improving the telecom sector of the UAE.
Introduction to Saudi Arabia and its Economic development
Saudi Arabia occupies the largest part of Arabian Peninsula, it is located on a 1,960,582 sq km area most of it being a desert. Saudi Arabia hosts about twenty eight million citizens with more than 80% living in the urban areas. 90% of its citizens are Muslim Arabs (Saudi Arabia, 2001). Saudi Arabia hosts Median and Mecca which are the holiest cities of Islam. Saudi Arabia enjoys an oil based economy with the government controlling the major economic activities in that although private entrepreneurs exist, they are heavily regulated by the government. Its petroleum sector accounts for about 55% of its GDP and around 45% of the budget revenues. 40% of its GDP comes from the private sector