Name: Saad Hasan Niazi
Roll Number: 22667
Section: 7 - C
Assignment: Term Report on Globalization of Saudi Arabia
Submission Date: 16, Dec 2013
Saudi Arabia (Kingdom Of Saudi Arabia)
1 PROFILE OF THE COUNTRY
Saudi Arabia occupies most of the Arabian Peninsula, with the Red Sea and the Gulf of Aqaba to the west
and the Persian Gulf to the east. Neighboring countries are Jordan, Iraq, Kuwait, Qatar, the United Arab
Emirates, the Sultanate of Oman, Yemen, and Bahrain, connected to the Saudi mainland by a causeway.
Saudi Arabia contains the world's largest continuous sand desert, the Rub Al-Khali, or Empty Quarter. Its
oil region lies primarily in the eastern province along the Persian Gulf.
Named after the ruling Al Saud family, which came to power in the 18th
century, the country includes the
Hijaz region - the birthplace of the Muslim Prophet Muhammad and the cradle of Islam. This fact, combined
with the Al Sauds' espousal of a strict interpretation of Sunni Islam known as Wahhabism, has led it to
develop a strongly religious self-identity.
Oil was discovered in 1936, and commercial production began during World War II. This oil-derived wealth
allowed the country to provide free health care and education while not collecting any taxes from its people.
Saudi Arabia was neutral until nearly the end of the war, but it was permitted to be a charter member of the
King Abdullah took bold steps to reshuffle his government in February 2009, promoting reformers, firing
controversial officials, including the conservative head of the religious police and the country's most senior
judge, and appointing his first-ever female minister, for women's education. Saudi Arabia was largely
spared the popular uprisings that spread throughout the Middle East and Northern Africa in early 2011,
largely because King Abdullah remains popular among Saudis and the country's oil wealth provides a level
stability not seen in countries such as Egypt. Nevertheless, unemployment among young Saudis is high,
housing is in short supply, and there has been a push for broader civil liberties, particularly for women.
Saudi Arabia lifted the ban forbidding women from competing in the Olympic Games, and sent three
athletes to London in 2012. In another advance for women's rights, 30 women took seats on the formerly
all-male Shura council. It was an enormous step that met with opposition from conservative clerics.
The population has been rising significantly over the years. According to a census held many years ago, the
population was about 3,121,000. It then underwent a 29.5 percent increase and jumped up to 4,041,000 in
1960. This growth rate then increased greatly during the next 10 years. By 1980 the population had become
9,801,000 (an increase of 69.8%) and had grown to 16,139,000 in 1990 (a 64.7% increase). At this point
the government realized how drastically their country was becoming overcrowded and started
implementing laws to control population growth. As a result, the population only grew by 24.2% in the next
decade, with the total number counted at 20,045,000 in 2000. This rate further decreased by 6.4%, with the
total population adding up to 29,195,895.
Saudi Arabia has an oil-based economy with strong government controls over major economic activities.
It possesses about 17% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum,
and plays a leading role in OPEC. The petroleum sector accounts for roughly 80% of budget revenues, 45%
of GDP, and 90% of export earnings. Saudi Arabia is encouraging the growth of the private sector in order
to diversify its economy and to employ more Saudi nationals. Diversification efforts are focusing on power
generation, telecommunications, natural gas exploration, and petrochemical sectors. Over 5 million foreign
workers play an important role in the Saudi economy, particularly in the oil and service sectors, while
Riyadh is struggling to reduce unemployment among its own nationals. Saudi officials are particularly
focused on employing its large youth population, which generally lacks the education and technical skills
the private sector needs. Riyadh has substantially boosted spending on job training and education, most
recently with the opening of the King Abdallah University of Science and Technology - Saudi Arabia's first
co-educational university. As part of its effort to attract foreign investment, Saudi Arabia acceded to the
WTO in 2005. The government has begun establishing six "economic cities" in different regions of the
country to promote foreign investment and plans to spend $373 billion between 2010 and 2014 on social
development and infrastructure projects to advance Saudi Arabia''s economic development.
2 IMPORT AND EXPORT OF THE COUNTRY
Imports: Saudi Arabia was the United States 8th largest supplier of goods imports in 2011. U.S. goods
imports from Saudi Arabia totaled $47.5 billion in 2011, a 51.1% increase ($16.1 billion) from 2010, and
up 234% from 2000. U.S. imports from Saudi Arabia accounted for 2.2% of overall U.S. imports in 2011.
The five largest import categories in 2011 were: Mineral Fuel (oil) ($46.2 billion), Organic Chemicals
($509 million), Fertilizers ($265 million), Special Other (returns) ($127 million), and Iron and Steel
Products ($115 million). U.S. imports of agricultural products from Saudi Arabia totaled $2 million in 2011.
U.S. imports of private commercial services* (i.e., excluding military and government) were $504 million
in 2010 (latest data available, up 20.6% ($86 million) from 2009, and up 58% from 1994 level. Other private
services (financial services), travel, and other transportation (port services) categories led U.S. imports from
Exports: Saudi Arabia was the United States' 25th largest goods export market in 2011. U.S. goods exports
to Saudi Arabia in 2011 were $13.8 billion, up 19.6% ($2.3 billion) from 2010, and up 122% from 2000.The
top export categories (2-digit HS) in 2011 were: Vehicles ($4.4 billion), Machinery ($3.0 billion), Electrical
Machinery ($950 million), Optic and Medical Instruments ($589 million), and Aircraft ($504 million). U.S.
exports of agricultural products to Saudi Arabia totaled $1.3 billion in 2011, the 17th largest U.S.
agricultural export market. Leading categories include: coarse grains ($183 million), wheat ($161 million),
vegetable oils (excluding soybean oil) ($128 million), rice ($114 million), and dairy products ($113 million).
U.S. exports of private commercial services* (i.e., excluding military and government) to Saudi Arabia
were $4.5 billion in 2010 (latest data available), 13.6% ($541 million) greater than 2009 and up 143% more
than 1994 levels. The other private services (business, professional and technical services) category
accounted for most of the U.S. exports to Saudi Arabia in 2010.
Health & Social Services: The establishment of a modern health care and social services system has been
one of Saudi Arabia’s most stunning successes. The Saudi health care network provides free care to the
general public and some of the most sophisticated specialized care available anywhere in the world. The
government also sponsors a wide range of social services programs aimed at ensuring that every citizen has
a decent standard of living.
Before the Kingdom of Saudi Arabia was established in 1932, health care was generally provided by local
healers. One of King Abdulaziz’s first initiatives for his new state was to establish free health care, not just
for citizens, but for the pilgrims who come to the Kingdom to visit the Islamic holy sites. As a result,
medical facilities were set up throughout Saudi Arabia. Within a relatively short period of time, once-
endemic diseases such as malaria and smallpox were virtually eradicated, the infant mortality rate
plummeted, and life expectancy rose sharply. The Kingdom’s health care system also benefited
tremendously from the government’s five-year development plans, the first of which was launched in 1970.
These ongoing plans promote development in areas such as agriculture, commerce, industry, transportation,
communication, education and health care. The first four development plans (1970-1989) brought dramatic
changes to the Saudi health care system. In the beginning, the emphasis was more on establishing the
necessary infrastructure of hospitals, clinics, pharmacies, laboratories and research facilities. As these
facilities were put into place, the emphasis gradually shifted to the improving the quality of medical care
and services. The Kingdom encouraged more Saudis to pursue careers in health care, and took steps to
attract qualified medical personnel from abroad. Technology was continually updated and the latest medical
advances incorporated. Saudi facilities also established working relationships with leading specialized
hospitals around the world. The transformation of the Saudi health care system since 1970 has been
astonishing. In 1970, there were 74 hospitals with 9,039 beds; by 2005, there were 350 hospitals with nearly
48,000 beds. The Ministry of Health and other government agencies have established most of the health
care facilities throughout the country. The government has also encouraged greater private sector
involvement by offering long-term, interest-free loans for the establishment of hospitals, clinics and
pharmacies. By 1990, the private sector accounted for 27 percent of Saudi health care services.
Quality Care: Today, Saudis have access to a national network of thousands of hospitals and clinics, and
can obtain virtually any specialized medical treatment they might need in the Kingdom. Sophisticated
surgical procedures such as open heart surgery and organ transplants are routinely performed in Saudi
hospitals by medical professionals that meet the highest international standards. One area of particular
note is the success in separating conjoined twins by medical teams at a number of National Guard
hospitals. In addition, Saudis medications are readily available to patients at a low cost thanks to subsidies
from the government. Saudi companies are also encouraged to manufacture pharmaceuticals.
3 JOINT COLLABORATION OF THE COUNTRY
Saudi Arabia has automated its traditional stock exchanges, using technological advancements in
telecommunications in connecting dealers locally, and all over the world, so, that orders can be promptly
executed; money has become enormously mobile with the touch of a computer, irrespective of national
borders. It transmits real life information on prices, which allows investors to monitor global markets and
assess the impact the information will have on the risk/return profile of their investments.
The Saudi stock exchanges have benefited from the automation to improve the operation efficiency,
accuracy of trading, settlement processing, information dissemination in addition to enhancing surveillance
and better tracking of trades. In the late 1980s SAMA introduced two key initiatives, important for further
rapid development of the payment systems in the Kingdom.
Westinghouse Electric Company, Toshiba Corporation and Exelon Nuclear Partners (ENP), the largest
nuclear power fleet operator in the U.S., today announced that they have signed a memorandum of
understanding (MoU) to create a joint proposal for the construction of nuclear power plants for King
Abdullah City for Atomic and Renewable Energy (K.A.CARE), the government body established to
develop alternative energy sources in Saudi Arabia.
Toshiba and Westinghouse will provide world-leading nuclear expertise related to their advanced reactors.
ENP will provide operations and associated services for the project.
“This joint promotion, bringing together Toshiba and Westinghouse’s proven technologies and Exelon’s
operating know-how, allows us to develop proposals for Saudi Arabia for the most advanced and safest
nuclear energy technologies in the world today,” said Yasushi Igarashi, Corporate Executive Vice President
of Toshiba. “We are confident that this project will go well, as we already have a deep working relationship
with Toshiba and with Exelon, which is a long-standing customer and business partner.” Interest in nuclear
power is rising in Saudi Arabia. K.A.CARE was established in April 2010 to promote alternative energy
sources to oil, and the country plans to construct as many as 16 nuclear power reactors by 2032.
Amir Shahkarami, CEO of Exelon Nuclear Partners said “Exelon Nuclear Partners is excited about the
prospect of collaborating with Toshiba and Westinghouse to help Saudi Arabia achieve its goals of
developing alternative energy resources that will help the Kingdom to reduce its reliance on oil and
strengthen its position as a regional energy supplier.” Westinghouse supplied the world's first pressurized
water reactor in 1957 in Shipping port, Pennsylvania, U.S. Today, Westinghouse technology is the basis
for approximately one-half of the world's operating nuclear plants, including more than 50 percent of those
in the EMEA region. The AP1000 plant is the first Generation III+ design to receive design certification
from the U.S. Nuclear Regulatory Commission (NRC). In addition to the United States, the AP1000 plant
has undergone detailed reviews in Canada, China and the United Kingdom. Eight AP1000 units are
currently under construction worldwide, with four units each in the United States and in China. Toshiba is
a world-leading diversified manufacturer, solutions provider and marketer of advanced electronic and
electrical products and systems. Toshiba Group brings innovation and imagination to a wide range of
businesses: digital products, including LCD TVs, notebook PCs, retail solutions and multifunction printers;
electronic devices, including semiconductors, storage products and materials; industrial and social
infrastructure systems, including power generation systems, smart community solutions, medical systems
and escalators & elevators; and home appliances. Using low-enriched uranium with water as a moderator
and coolant, the BWR directly boils water at its core and generates steam. This is one of several mainstream
reactor power plants.
Exelon Nuclear Partners is 100% owned by Exelon Generation. Exelon Generation is the largest operator
of nuclear generating stations in the United States with over 17,000 megawatts of capacity. The generation
business consists of nuclear, fossil, and renewable electric generating facilities. AP1000 is a trademark or
registered trademark of Westinghouse Electric Company LLC, its affiliates and/or its subsidiaries in the
United States of America and may be registered in other countries throughout the world.
Samsung Mobile Phones: Among the current nineteen local producing corporations, Samsung Electronics
Co. has most successfully built a trustful and powerful brand image of Korean product: Samsung mobile
phone. After they have won the confidence of Saudi consumers on Samsung phones, the competition with
Japan and other global mobile companies proved to be Samsung's victory. Also, since 1998, Samsung has
produced mobile phones equipped with voice-dialing function, taking into account that Saudi Arabia is one
of the few nations that do not yet prohibit telephoning while driving the car (Chosun.com, 1998). Thanks
to this new technology that no other corporations were able to produce, Samsung Electronics Co.
Also, considerable efforts and money spent for effective advertisements played its role (Chosun.com, 1998).
It showed that in the remote market in the Middle East region, the first task is to spread and convince the
natives of the quality of Korean products. For example, Samsung has made an ad showing a young girl
hopelessly lost in the desert. However, she had a Samsung mobile phone with her and in the midst of the
vast desert, she was able to get rescued by telephoning her parents.
Satellite Broadcast Receivers: Another successful locally produced good is a satellite broadcast receiver.
This success also could be achieved because the corporation had accurately grasped and sensitively paid
attention to changes in the inclinations and needs of the Saudi people and used that research to cut into the
market promptly. A satellite receiver was originally a prohibited product in Saudi Arabia because the
government viewed the item as contradictory to Islamic customs. However, Saudis were greatly attracted
by the product, which allowed them to connect with the entire world just by sitting in the living room. In
1991, the start of the Gulf war brought satellite receivers secretly into Saudi market (Chosun.com, 1991).
Koreans sensed this change and foreseeing that the government would lift the ban on the item in near future,
they started selling receivers to Saudis at low prices in order to first to familiarize Saudi consumers with
Korean products. SK networks since 1982 and Taihan Electric Wire Co. since 1984 are the local
corporations still producing Korean satellite receivers which now dominate approximately 80% of all sales
in Saudi Arabia (Chosun.com, 2001). However, in order to maintain their substantial market share, experts
argue that Korean corporations must keep renovating and improving the designs and capacities of the
products to suit the needs of Saudi consumers.
Hyundai Motors Cars: Hyundai Motors is currently the third largest car selling company after Toyota and
GM motors in Saudi Arabia (Chosun.com, 2005). However, the prospects for the future seem excellent.
Hyundai Motors will be building a local factory and branch office this year and dispatch several able Korean
managers to oversee the process and start full-scale projects to boost up their sales. But prior to Hyundai's
decision to locally produce and sell the cars, Hyundai cars have been popular all along in Saudi Arabia. "It
is very common to see Korean cars from Hyundai and Daewoo here", says a Korean student studying in
Jeddah (Chosun.com, 2005). Comparatively low price and high quality of imported Korean cars have been
attracting Saudi consumers even though no substantial efforts were made to raise the sales. Now that
Hyundai Motors have decided to advance into the market for real, there seems to be a bright future ahead.
With these high car sales, three tire producing corporations have also made their mark in the Saudi market:
SSangyong corporation since 1983, Kumho Tire corporation since 1981, and Hankook Tire corporation
since 1986 (Chosun.com, 2004). All these three corporations have made a branch office in the city of Jeddah
and have been raising consistent profits along with car companies.
4 RELATIONSHIP OF THE COUNTRY WITH OTHERS
The Kingdom is drastically revising its business-related laws to increase transparency and strengthen the
country’s global competitiveness. The laws currently under revision include the Capital Markets Law, the
Companies Law, the Agency Law, the Insurance Law, the Mining Law and the Labor Law. Several laws
are currently under revision with the aim of pushing forward the process of economic liberalization. In May
2001 the government also issued guidelines for transparency of economic and fiscal data. In addition, a new
Supreme Economic Council (SEC) was created in 2001 to speed up economic reforms aimed at opening
Saudi markets and ensure stability for investors. Under the oil dominated economic structure, Saudi Arabia
has been able to maintain its status as the leading nation in the Middle East region based on the enormous
amounts of revenue from the chief resource. Since oil is a valuable resource for Korea and Korea is one of
the largest oil consuming nations in the world, Saudi Arabia has been one of the most important trading
partners over the last fifty years. In order to assess and evaluate the relationship between the two nations in
the economic perspective, this paper will first investigate the development of the Saudi economy since the
foundation of the Kingdom in 1962 and specially analyze the globalization process of the 1990s. Then, the
paper would deal with the economic exchanges between Saudi Arabia and Korea. However, since Saudis
exports and sales to Korea had been primarily based on oil and no other Saudi goods and corporations have
made noticeable profits in Korea, the paper would mainly focus on the success and advancement of Korean
corporations and businesses into the Saudi market based on the collected news reports ranging from early
1900s. And among these Korean advancements into the Saudi market, the news reports primarily centered
upon the construction boom of the 1970s and the 1980s, and the recent successes of corporations producing
electronic devices such as mobile phones and air conditioners. Saudi Arabia has carried out seven five-year
economic development plans since 1970 to develop and amplify infrastructures as well as derive various
industries based on oil (oil-production, oil-refinery, and petrochemical industries). However, due to falling
oil prices during the 1980s, Saudi economy revealed grave problems related to their economic structure.
The economic growth rate dropped from 10% in the 1970s to an average 1.3% in the 1980s. This decline
indicated how much the Saudi economy depended on just oil and had no other way to sustain their growth
and prosperity if not for the chief resource. Thus, ensuing economic development plans have included
special economic policies to diversify the economic structure in order to stabilize the economy in face of
unpredictable oil prices. Also, since the 1990s under the command Crown Prince Abdullah who have been
enthroned following the death of King Fahd in June this year, Saudi Arabia has planned ambitious
globalization strategies to recover the dynamism of the growth.
5 CULTURAL FACTORS OF GLOBALIZATION OF SAUDI ARABIA
Translation as a Means of Learning English: One of the more serious attitudes hindering the progress of
translation studies is the belief that translation is a means of learning English or any foreign language.
Many Saudi instructors and administrators erroneously believe that the basic aim of a translation
curriculum is to enhance students’ basic language skills such as speaking and writing. They thus see no
reason to introduce technology since they believe this will hinder the acquisition of language skills. As
the argument goes, it is acceptable to commit all sorts of grammatical mistakes in any target text simply
because it is not the translator’s native. Globalization lies at the heart of modern culture; cultural practices
lie at the heart of globalization. This is not a reckless claim: it is not to say that globalization is the single
determinant of modern cultural experience, nor that culture alone is the conceptual key that unlocks
globalization's inner dynamic language. It is not that the translator is deliberately careless but that he/she
cannot comprehend the concept that distorting the target language is viewed by the receiving community
as an offensive and unacceptable practice. The profusion of category 3 scores (out of a scale of 4) in
numerous English renderings by Arab translators makes it evident that many not aiming for accurate and
aesthetic transfer from source to target text, but that they are simply translating for the sake of gaining
fluency in the target language. In cases where the source text is of a religious nature, the impression is
that translators are undertaking the task in the firm conviction that they are performing a religious duty for
which they will earn the blessings of God.
Negative Attitudes towards Translation Technology: It is clear from our survey of Saudi universities that
there is a general reluctance and perhaps even aversion to introducing translation technologies. Students
of translation have not been introduced to the most important advances which have been made in software
design in recent years nor have they been provided with the ability to deal with modern high tech tools in
the workplace of tomorrow such as on-line dictionaries, desk-top publishing systems and website
automation technologies, and to become familiar with the commercial implications of these tools. Fear of
MT appears to be strongest in the Saudi community where there is a basic lack of computer literacy
among many educators and professional translators alike. It is basically these educators in the field of
translation who are blocking the introduction of technology courses for fear of losing face, appearing
incompetent, or perhaps even losing their jobs. Translation, they insist, is an ‘art’ which cannot possibly
be reconciled with the machine. What is needed to introduce translation technology is obviously a more
open-minded and proactive attitude. Most important, we need to make educators realize that machines are
not a threat to their livelihood but in fact a means of enhancing their career possibilities. Right now, it
appears that we are in a deadlock, a kind of vicious circle exists: many translators and even language
teachers are refusing to integrate technology fearing loss of jobs, educators in decision-making positions
are in turn empathizing with them.
Translation Curriculum Development: As researchers have pointed out (Gabr, 2000; Zenger and Hargis,
1982), when we evaluate a training course, we actually evaluate its effectiveness, i.e. we measure the
achievement of its objectives. The problem with the various translation courses offered in Saudi Arabia is
that they are not carefully evaluated on a regular basis. What happens in reality is that educational
institutions hardly pay attention to translation course evaluation; in fact the evaluation step is never
considered at all.
6 SAUDI ARABIA INITIATIVE OF FUTURE PROBLEMS
Because of the problems of the region, bourgeoisie will not be able to supply a safety net for the people
since they are self-centered in politics and pursued personal goals in their relationships with state rulers. If
these issues are not corrected effectively and promptly, oil-rich countries such as Saudi Arabia. According
to Cordesman, as Saudi Arabia’s population increases, it produces pressure on the economy of the country.
This pressure is so severe that it has some consequences for Saudis. Saudi Arabia is not oil-rich in the sense
that its current economy can support its people. Rapid population growth and declining oil prices have
reduced its per capita incomes from oil exports from $24,000 in 1980 to $2,300 in 2002. Although Saudi
Arabia was oil-rich in 2003, it has experienced almost two decades of major budget and trade deficits, and
its government debt is just about 100% of its Gross National Product (GNP). It no longer can provide social
services, improve and develop its infrastructure, and expand its economy without major economic reform
and foreign investment. This type of reform and investment is crucial to Saudi Arabia in order to gain
stability internally, but it needs U.S. They should seek growth in exports, international trade and Foreign
Direct Investments (FDI) in order to remain oil-rich countries in the future. The nature of the political
environment creates a problematic outcome for these countries.
With the demographic nature of the region, an emerging challenge generates socio-economic and political
problems for the MENA Region. The Arab world is likely to face a great challenge in near future. As their
huge young population needs employment, it requires a lot of work and effort of all concerned to employ
them effectively. The region’s risk profile is high due to other factors such as the undemocratic environment
and terrorism that impedes the implementation of new strategies for job creation. “The Arab countries risk
being left behind in global competition precisely when they need to accelerate growth to create jobs for its
growing labor force.” These have some harsh implications for the economic performance of Arab countries.
The Arab world has a good grasp of what the problems are; however, the solution implementation phase
also presents another considerable challenge. Unless the region’s imminent unemployment problem is
solved effectively, it will be hard to develop the demographic advantage for the Arab countries since they
will have a huge potential labor force in coming years. Demographic advantage is a well-known experience
that has been a profound factor for the success in East Asia since 1960. Gaining prosperity and liberalizing
society and an organized society may lead to an effective integration to the global economic system,
national welfare, high Gross Domestic Product (GDP), and a position among the developed nations. If it is
really the case, the demographic trend can become a reward for them rather than a burden. Inaction and
lack of globalization may lead to poverty, social unrest and violence, inhibiting reform and hindering
development since the Arab countries may not perceive globalization positively. Saudi Arabia, Kuwait and
Algeria the wages were precarious due to fluctuating oil prices since they are the key oil exporter states.
Therefore, for Saudi Arabia job creation, poverty reduction and political stability measures will be the key
to be able to achieve the desired level of economic growth. “The fact that lower-income countries have
many business opportunities while the most of the 9/11 hijackers were Saudis, presents the diversity and
the complexity of the region.”45 Therefore, the assessments would be more realistic if completed for each
specific Arab country rather than generalizing them.
7 SOLUTIONS FOR SAUDI ARABIA FOR FUTURE PROBLEMS
A few solutions for the potential unemployment challenge in the Saudi Arabia can be to increase labor-
intensive export-based industries to be able to employ as many new workers as possible. Then they should
bring high technology into some sectors to boost the productivity to reduce prices inside the country and to
promote exports. FDI is going to contribute to increasing the saving rate of the country, improving the
quality of the workers by raising their technological awareness, and importing a distribution system. How
will a strategy incorporate these solutions? This region needs to resolve this question. Despite the fact that
the region gets constructive support and needed encouragement from the developed nations, it is not at the
desired level in terms of integration to the world economic system and globalization trend. Political
instability has huge effects on the globalization process and the unemployment problem.
Saudi Arabia have been facing other interior and exterior difficulties for decades in addition to these
challenges. These include questionable credibility of the government and its unaccountability discourages
economic entrepreneurship. In this region, economic development and investment are directly influenced
by the political stability and the sustainable policies of the state. This helps increase the significance of the
political regime’s influence on the economic development model.