ABSTRACT
On balance, political risk, from the Saudi domestic view, is marginal and certainly very favorable when compared with all of the nations that are not members of the Organization for Economic Cooperation and Development. Another factor of the political risk equation is US-Saudi relations. A number of primarily social factors gives rise to serious questions about the economic feasibility of some of the industrialization schemes. Dispute resolution involving investment remains local because the Saudi government will not countenance any document providing for foreign law or courts of foreign arbitration. The legal system in Saudi Arabia has not evolved at the same pace as the modernization process. Constraints on investment prospects in the short term will be the predatory business practices from competitors—both local as well as foreign—various social restraints imposed on foreign residents, and the adaptability of the financial and legal institutions to the changed circumstances.
