The Economy of Saudi Arabia
The Rentier State and the Social Contract
Traditionally, citizens received jobs, subsidies and services funded by oil income in exchange for political stability, with few taxes.
A different bargain from taxation.
Bargain
The state provides jobs, cheap energy and welfare, and citizens accept limited political voice.
Public jobs
Many Saudis work in the government, with high wages.
Subsidies
Petrol, water and electricity were heavily subsidised.
Strain
A growing population and volatile oil income make this model harder to sustain.
A cheap tank of petrol
Low fuel prices benefited drivers but encouraged waste.
Assuming the contract can last forever
Demographics and prices strain it.
Key takeaways
- Oil income funds services.
- Public jobs are attractive.
- Subsidies are large.
- The model is under strain.
No recording for this one yet - EconReader can read it aloud for you.