By Dylan Bowman
World Economic Forum highlights challenges facing kingdom over next 20 years.
Education and institutional reform are key to the future of Saudi Arabia and to a lesser extend the rest of the region, according to a study released on Wednesday by the World Economic Forum (WEF).
In its latest look at where the Saudi Arabia will be in 20 years time, the WEF points to these areas as the biggest challenges facing the kingdom’s economic and social development.
‘Saudi Arabia and the World: Scenarios to 2025’ questions whether the Gulf Arab state will be able to implement necessary economic and political reforms, whether it will be able to maintain internal stability and whether it can develop an environment in which business can flourish.
“One of the KSA’s key challenges is to ensure that its education system is geared toward supporting the growing private sector as a means of aiding diversification and reducing reliance on state-run industries,” the report states.
“The scenarios demonstrate that ensuring that highly qualified Saudi workers with relevant skill sets are available in an innovative economy is crucial to the country, in reducing national unemployment and the economy’s current reliance on foreign labour."
Saudi Arabia, like the rest of the Gulf, is heavily reliant on foreign workers - around 33% of the population is made up of expatriates - and has had mixed results with schemes the government has introduced to try and encourange Saudi nationals into the workforce. Unemployment among Saudis currently stands at around 11%.
The WEF describes Saudi Arabia’s leadership and government structures as a primary driver of the country’s future, offering both a challenge and an opportunity to the government.
“While transparency is increasing and adherence to the rule of law has improved in recent years, there is room for far greater efficiency and openness in government structures,” the study states.
“The scenarios indicate that this would reduce opportunities for corruption, increase the effectiveness of public programmes and mollify some critics of the government who have the ability to destabilise the nation.”
One area that has come in for criticism in the past is the kingdom's courts. The government earlier this month announced plans to spend 7 billion Saudi riyals ($1.87 billion) to overhaul its judiciary system, promising to place more importance on the independence of courts.
The WEF study presents three possible scenarios for Saudi Arabia over the next 20 years - Oasis, Sandstorm and The Fertile Gulf - taking into account domestic issues, regional stability and the world economy.
Oasis describes a scenario where regional stability continues to be a concern for the kingdom, but a focus on coordinated institutional reforms and relationship-building within the GCC region enable Saudi Arabia to flourish in a global environment characterised by increased protectionism.
Sandstorm describes a future where a series of conflating events leads to significant regional instability, including conflict between the US and Iran, thereby creating a turbulent domestic environment and adverse economic conditions for Saudi Arabia.
The Fertile Gulf describes a world in which Saudi Arabia takes advantage of a global environment characterised by robust demand for energy and increasing globalisation and is able to expand its physical and human capital, providing a platform for diversified growth despite grappling with environmental problems.
”As one of the largest economies and a key political player in the region, Saudi Arabia has a critical role in determining the future of the Middle East, if not the world,” Nicholas Davis, scenario expert at the WEF and co-author of the study, said in a statement.
“It is very important that businesses, politicians and community leaders understand the forces at play within the Kingdom and appreciate both the dynamics of the country and the range possible futures that may evolve.”