ABSTRACT
While the industrial sector may be the most dynamic sector in the economy, the road to industrialization is very long indeed and involves a highly complex process.1 This process essentially entails changing the existing economic structure into one of greater efficiency and diversified modes of output. The transformation covers a far wider scope than simply establishing more factories and plants, for industrialization remains an input in the development process rather than a goal in itself. Industrialization involves increased capital equipment and improved productivity per worker, as well as expansion in the variety of goods produced; it also includes the development of mining and electric power, because of their significant contribution in the early stages of industrial growth in developing countries such as Saudi Arabia. An overall economic-development strategy designed for the particular country in question should enable the industrial sector to innovate, not only as a means of increasing output or national income, but also as a means of introducing modern technology and changing attitudes towards development.2 Saudi Arabia has been, and will continue to be, affected by (1) the availability of capital, (2) the availability of cheap energy,3 (3) diversification as a means of offsetting a wasting asset, and (4) industrial ramifications of the participation agreements.4 With respect to these conditions, oil and natural gas, so abundant in the Kingdom, will act as generators of capital today and simultaneously offer the physical base for viable industry in the future. Moreover, should petroleum lose its dominant place in energy consumption, as it inevitably will, the amassed wealth could allow continuation of largescale financing of industrial development. It must be pointed out, however, that industrialization becomes critical in order to cushion the eventual end of governmental revenue derived from these wasting and non-renewable hydrocarbon assets.
