Saudi Economic Woe

Much can be said of Saudi Arabia’s economic problems–the inequity, particularly affecting the Shia and women, the dependence on imported labor, the existence of widespread poverty in a land of enormous prosperity, etc. In a piece for the National InterestI examine the broader problem–the way massive oil revenues and a massive bureaucracy combine to create severe distortions and stifle private economic activity. Despite its enormous resources, the Kingdom has developed a weak and fragile economy. It’s not clear that there’s a solution to this, as the economy of the state and the politics of the state are intrinsically linked (for a much deeper and more technical treatment than I could hope to provide, check out  Steffen Hertog’s Princes, Brokers, and Bureaucrats). By shaping this economy and leaving the education system in the hands of the clerics, the House of Saud has made itself necessary. It has made–probably in part by accident–a society too conservative, too contradictory, and too economically feeble to replace them without creating severe instability.

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