The political economy of reforms under Vision 2030

Hertog, Steffen ORCID: 0000-0002-6758-9564 (2024) The political economy of reforms under Vision 2030. In: The Economy of Saudi Arabia in the 21st Century: Prospects and Realities. Oxford University Press, 359 - 380. ISBN 9780198863878

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Abstract

This chapter explains that the old Saudi social contract is eroding and, with it, the old growth model based on state spending and state employment. At the same time, the social opening of the country is compensating for the erosion of the older system. Nevertheless, the new era has yet to bring about new private economic activities as the economy continues to rely on fiscal stimulus from the state, government employment, and low labour costs through the employment of migrant workers. Economic diversification is hard and takes a long time under the best circumstances. The adjustment process may not be completed by 2030 and much pain could be inflicted along the way, with living standards dropping. Vision 2030 has focused more on large projects than on addressing structural constraints to economic development-although, in the end, it will very likely be these constraints which determine the Kingdom's growth and diversification trajectory. Many of the Vision's components are being deployed only slowly, not only because of limited buy-in by the stakeholders but also because they are in tension with the structural foundations of the established social contract and growth model. The chapter proposes some reorientation of rent sharing towards a market-conforming welfare mechanism rather than simply dismantling the old social contract through a reactive policy of austerity.

Item Type:	Book Section
Additional Information:	© 2024 The Author
Divisions:	Government
Subjects:	H Social Sciences > HD Industries. Land use. Labor J Political Science > JQ Political institutions Asia, Africa, Australia, Pacific J Political Science > JV Colonies and colonization. Emigration and immigration. International migration
Date Deposited:	09 Sep 2024 13:24
Last Modified:	23 Sep 2024 16:21
URI:	http://eprints.lse.ac.uk/id/eprint/125359

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