Literature Review Examining the Impact of Oil Resources Availability Essay

Literature Review Examining the Impact of Oil Resources Availability on Economic Growth in An Oil-Based Economy with reference to Saudi Arabia - Essay Example the case of Saudi Arabia, the availability of rich oil resources has brought untold affluence to this tiny nation, however despite this, economic growth has been slow since the eighties and there has been increasing unemployment, with the unemployment rate among young Saudis estimated to be between 8 to 13 percent. The question of how such a situation could have developed in a country rich in natural oil resources is examined below. The Petroleum Sector in Saudi Arabia comprises roughly 75% of budget revenues, 45% of its GDP and 90% of its export earnings (www.e.wikipedia.org). Saudi oil reserves are estimated to be the largest in the world – about 260 billion barrels - and the country is the world’s largest exporter, with oil comprising 95% of the country’s exports and almost 75% of government revenues (www.en.wikipedia.org). In view of the country’s heavy dependence on oil, the Government has recently begun to encourage more development in the private sector, including in the power generation and telecom sectors. Saudi Arabia has also joined the WTO in 2005, in order to enhance its trading, diversify its economy and attract a higher proportion of foreign investment. The Government has also been spending larger amounts on infrastructure development, job training and education. Oil was first discovered in Saudi Arabia in the 1930’s, by U.S. geologists. Oil production in Saudi Arabia soared in the 60s and gave rise to a period of strong economic development which continued into the 1970s.(www.en.wikipedia.org). During the Seventies, there was an oil boom and the Gross Domestic Product per capita of Saudi Arabia soared, reaching a figure of 1,858%, however such growth was unsustainable and shrank to 58% in the eighties, although it has registered a 20% increase in the nineties.(www.earthtrends.wri.org) Most of the oil in the country is produced on behalf of the Saudi Government by a single Company, Saudi ARAMCO. After the 1973 Arab Israeli war, there