Dissertation_Dr Faisal Almubarak

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the premise that Ml benefits of external economies will be maximized. This leads to dual
structured economies in which the majority of state energies go to the one or a few urban
centers where intense and rapid growth occurs while the periphery is left to decline and
stagnate. Due to the peculiarities of the Saudi development (i.e. the reliance on oil riches)
this situation has been largely avoided. The agricultural programs of the government have
had their share in conditioning the contemporary spatial organization of the Kingdom.
Starting with King Abdul-Aziz' hijar (agricultural-religious colonies program to settle the
bedouins) the emphasis on developing the rural areas by the government has alleviated the
widening gap of economic opportunities between the city and their rural hinterlands. Due
to government subsidized agricultural programs, the local production of major food items
such as red and white meat, milk, vegetables, fruits and fish, is said to meet 70 percent of
the national demand. 53
D. Industrialization and Saudi Industrial Policy
Traditionally, Saudi Arabia is a non-industrial country in the modern usage of the
term. In 1954, there were five industrial establishments worth a total capital of SR 42
million. Modem industrial activity owes its start to the enlistment of foreign capital to
exploit the oil reserves of the country. This constituted a radical shift eclipsing the
country's pre-industrial modes of production of urban handicraft and heralded an epoch of
industrialization and economic growth. Yet, since its inception, the oil industry has been
highly capital intensive, it demanded a low number of labor force (only 1.1 percent of the
total Saudi nationals work in the oil industry, whose share in the Gross National Product
(GNP) amounts to 38 percent). 54 Table 3.2 illustrates the distribution of the Saudi labor
force by major economic activity.
In the 1950s there were only few private Saudi firms which existed in the Eastern
Province due to Aramco's support. They were largely geared toward the oil company's
generated services. The construction boom in the cities stimulated the growth of some
small industries manufacturing building materials, furniture and other household needs.
The private sector's interest in industrial investment has been growing slowly, dependant
on, first, Aramco's needs since the 1940s, and, later, on the government's generous aid.
This slow development of a bona fide industrial sector can be attributed to several factors.
Firstly, faced with fierce foreign competition, the traditional one-man shop handicraft
industry has gradually given way to an onslaught of imported mechanized products.