The Lawrence Livermore National Library has now achieved nuclear fusion ignition. Twice. Fusion isn’t likely to replace the world’s energy needs for at least a decade or more, but the writing is on the wall. Hydrocarbons WILL be phased out. Any economy still reliant on hydrocarbons, or fossil fuels, will be relegated to irrelevancy. Saudi Arabia, the world’s largest oil exporter, is doing whatever they can to not be left behind.
Being an Absolute Monarchy means that the royal family has tremendous command in the operation of the economy. This is why Saudi Arabia has a large public sector and the goals of the government can be worked towards directly instead of trying indirectly influence the economy that one may see in a more laissez-faire economy.
The plan to divest from hydrocarbons is already yielding results. Hydrocarbons as a percentage of GDP were near 50% in the 2005-2010 five year average, on par with the average of the Gulf Cooperation Council, (GCC) of which Saudi Arabia is a key player. Yet in the 2017-2022 period, that percentage in Saudi Arabia had about halved, outpacing the GCC’s overall divestment away from hydrocarbons.
Data on Oil Dependence of Saudi Arabia and the GCC, International Monetary Fund.
Under the broader umbrella of Saudi Arabia’s Vision 2030, Crown Prince Mohammad Bin Salman, the de facto leader of the Kingdom, has been reaching out far and wide for economic partnerships to bring in investments from other nations and their industries of strength. The ink isn’t even dry for two such partnerships. With updates as recently as October 25th, Saudi Arabia forged a deal with Finland for deeper economic cooperation, especially in digital industries, estimated to be at $645 million annually. Meanwhile, Saudi Arabia just secured South Korean investment, notably by Hyundai to make cars locally in Saudi Arabia, that is also expected to exceed half a billion dollars.
Saudi Communications and Information Technology Minister Abdullah Al-Sawah and Finnish Foreign Trade and Development Minister Phil Tavio, Saudi Press Agency
President Yoon Suk Yeol and Samsung Electronics Chairman Lee Jae-yong on the Oct 2023 visit to Saudi Arabia. Published in The Korea Herald, image credit Yonhap News Agency
Sources:
Largest oil export:
https://www.investopedia.com/articles/company-insights/082316/worlds-top-10-oil-exporters.asp
Hydrocarbon reliance:
https://www.imf.org/en/News/Articles/2023/09/28/cf-saudi-arabias-economy-grows-as-it-diversifies
Finland Deal:
https://www.arabnews.com/node/2397321/business-economy
Korean Deal:
Korea Herald: