Beyond Oil – The Transformation to a Market-Based Approach: Envision Saudi Arabia 2030

Abstract

The present study sought to envision Saudi Arabia beyond 2030 by analyzing how the country will transform to a market based approach. The study rationale draws from the fact that Islamic principles that emphasize moderation are diametrically opposed to the asset pricing model in which individuals behave as price takers in a capital market that is perfectly competitive but nevertheless incomplete and frictionless. The study employed a meta-analysis of existing studies that seek to analyze Saudi Arabia’s transformation from an oil based economy. In the meta-analysis of secondary data, the researcher analyzed data that was collected previously and tabulated by others. The sources of data included government institutions for instance employment statistics from the Saudi government, Saudi Ministry of Economy and Planning, Saudi Central Department of Statistics and Information, Saudi General Organization and of Social Insurance, as well as the McKinsey Global Institute Analysis. The current transformation in Saudi Arabia was attributed to the fact that, following diversification and increased acquisition of assets in external capital markets, the Saudis were slowly coming to terms with the forces of capital asset pricing model. Secondly, the transformation is also attributed to increased investor willingness to pay a premium for securities that have a high return when the market is illiquid.

Keywords: Capital Asset Pricing Model; investors; market-based approach; petrodollar; transforming economies; Saudi Arabia.