Saudi Arabia was an economically underdeveloped country until  the early 20th century. The country had a poor economic  landscape, dominated by barren  deserts,  camel  caravans,  isolated  date  palms  and  Bedouin  life-style.  The  exceptions,  of  course,  existed  for  few  coastal  areas  such  as Jeddah on  the west-coast, because of continual  inflow of pilgrims  for  the purpose of  visiting Makkah  and Madina;  and Qatif,  Jubail  and Al-Hasa  on  the  east-coast, due to long-time fishing, pearling and date-farming traditions.

Modern  history  of Saudi Arabia  began  in  1930s with  the  discovery  of  oil. Over  a relatively  short-span  of  time  the Saudi  economy  has made  rapid  progress. From being  a  poor  country  with  limited  resources,  it  emerged  as  a  leading  economic power  in  the Middle East. From almost negligible GDP  in  the early 20th  century, Saudi Arabia’s real per capita GDP (in terms of purchasing power parity) reached a record high of $20.7  thousand  in 2007  that  ranks  the country as an upper-middle income nation. One should note that if it was not because of high population growth (3.4% per annum),  the country could have  reached at high-income  level category by now, just like its neighboring Gulf countries, namely Kuwait, Qatar, Bahrain, and UAE. While  the  real GDP  grows  at  4.9%,  population  grows  at  nearly  3.4%. This implies  that real per capita GDP  increases only at 1.5% per annum which,  in  turn, means that it will take nearly 50 years till real per capita GDP to be doubled.

The  Eastern  Province  has  served  as  the  engine  of  economic  development  of Modern Saudi Arabia.   King Abdulaziz  Ibn Saud,  the great  visionary,  foresaw  the great scope  for oil  in Saudi Arabia  in  the early 20th century and decided  to  invite western oil companies to explore it. Oil exploration began in due course in Dhahran area. Initial efforts were slow and uncertain, but eventually in 1936, Dammam Well No. 7 proved the existence of commercially viable oil. It was, however, not until the end  of World War  II  that  true  economic  impact  of  oil  on  domestic  economy was fully gauged. By 1945, production capacity reached,  for  the  first  time, at  level of 2 million barrels per day. Ras Tanura on the eastern coast soon became the beehive of  oil  activity,  with  setting  up  of  Saudi  Arabia’s  first  oil  refinery,  tank  farm,  and marine terminal.

Since  that  time,  Eastern  Province’s  oil  and  gas  resources  have  been  attracting vigorous flow of investments to Saudi Arabia. The government’s decision to launch Five-Year  Development  Plans,  from  1970s,  also  marked  the  beginning  of  an organized and mindful development process  in Saudi Arabia.  It was also seen as the  recognition  of  the  fact  that Saudi  economy  should  look  beyond  an  economy that is one-dimensionally dependent on oil.

In this respect, Saudi Arabia is pursuing the following two principal goals:

(i)  Economic diversification through the development of industry, agriculture, mining, and other non-oil sectors to decrease the country’s dependence on oil;

(ii) Encouraging  the private sector  to play a major  role  in  the Kingdom’s economic development under free market rules and Islamic frameworks.

This  development  process  –  though  consistent  with  the  principles  of  economic planning  –  has  its  roots  in  socioeconomic  traditions  of  the  country,  particularly Islamic  values.  Accordingly,  the  government  has  opted  for  a  liberal  free  market economy,  functioning  within  the  framework  of  Islamic  values.  This  economic strategy  has  worked  well  for  Saudi  Arabia’s  development  through  the  last  eight Five-Year plans.

Considering  the  latest  available  statistics  (i.e.,  2007), with more  than  $215  billion exports and $82 billion  imports, Saudi economy enjoys a significant  level of  trade surplus  that makes  the country a good candidate  for being an  international  lender. The  rate of gross capital  formation  is nearly 19% of  the country’s  real GDP which promises a steady economic growth in mid- to long-term. The Saudi government is well aware of  fundamental  roles of a dynamic and  consistent  flow of  investments needed  for  its  economic  development  plans.  Saudi  government  consistently encourages both  foreign and domestic  investors with a business environment  that meets high standards in terms of freedom, transparency, stability, and security.

Eastern Province  has  attracted  a  large  amount  of  foreign  capital  and  technology, thanks  to  world-class  infrastructure  (transport,  telecommunication,  utilities,  and water),  availability  of  abundant  raw  materials  and  other  favorable  factors  like advanced  banking  and  financial  institutions.  The  government’s  liberal  economic policies and incentives for private sector have further encouraged more investments in the province.

The province has  thrived under  these conditions, with  its  living standards currently comparable  to  those  in  the  industrially  developed  countries.  The  market  is flourishing with automobiles, modern household appliances, entertainment  industry products and  IT hardware and  software. Healthcare, education, and  luxury hotels too are of top international standards. The scope for further economic development in  the  province  is  indeed  bright,  especially  with  joint  ventures  and  foreign  direct investments.  Industries  and  services  alike  provide  new  vistas  of  opportunities  for further investments.