The State and Prospect of the Economy
The growth in FDI in the Kingdom and the dramatic changes in the Saudi economic structure refl ects a change in the orientations and emphasis of various development plans. Although Saudi Arabia is essentially a one-commodity (oil) developing nation, the goals of the development plans have been to reduce dependence on oil and to diversify sources of income. The fi rst plan (1970-1975) was a modest one. Nevertheless, as oil prices increased in 1973-74 a large amount of petroleum revenues was directed to economic development. The second fi ve-year plan (1975-80) was oriented toward building oil refi neries, petrochemical aluminum and steel plants, light industries, and natural gas processing plants. In subsequent development plans additional emphasis was placed on infrastructure (e.g., highways, ports, and communication facilities). A case in point is the creation of economic cities in the Kingdom. The development of the additional new cities is expected to cost about $283 billion over the next three years. The Knowledge
Economic City, to be fully completed by 2020, in Medina alone, is projected to cost $7 billon and aims to attract and develop talent from around the world (Sagia, 2007).