This paper examines Saudi Arabia’s dependence on oil, considering the profound effects that the resource has on the domestic, socioeconomic, and international affairs of the Kingdom. It is determined, after examining the economic and environmental factors that make it necessary, that Saudi Arabia must reduce its dependence on oil and diversify its economy, ideally by pursing solar energy. This conclusion is reached by considering Saudi Arabia’s domestic challenges, which include unemployment and rising domestic energy demand, as well as factors such as the price volatility of oil and changing global energy trends. A Saudi transition to solar power is determined to be both plausible and beneficial for the Kingdom, although not without its challenges. This paper also emphasizes the importance of the Kingdom to increase the role of the private sector and attract foreign investment, which is necessary for the diversification process. The current development plan, Vision 2030, is critically assessed as ambitious-looking but somewhat limited, and next steps are recommended for Saudi Arabia to take in order to lay a sound foundation for diversification. Finally, it is concluded that whether or not Saudi Arabia will actually go through with this process depends on the ability of oil to continue providing the Kingdom with power and money.
Economic Theory | Growth and Development | Near and Middle Eastern Studies | Other Economics
Mouritsen, Sofia, "Black Gold in a Changing World: An examination of Saudi Arabia’s dependence on oil and the possibility of a solar energy transition" (2018). Independent Study Project (ISP) Collection. 2964.