ABSTRACT
After nearly twenty-five years of relatively high oil revenues, Saudi Arabia and the other economies of the Gulf States remain overwhelmingly dominated by revenues from this source. In addition, while considerable industrial diversification into non-oil sectors has been achieved, the results have largely been below expectations. Consequently, it is not apparent that the non-oil sectors can sustain growth and development without a steady infusion of government expenditures. 1 Specifically, lower oil prices have resulted in falling state revenues and consequent reduced spending on infrastructure and industry. This, in turn, has exacerbated social unrest. At the same time, increased military spending by Iran and Iraq is also forcing the country to expand its allocations to the military.
