Dissertation_Dr Faisal Almubarak

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imports of raw materials and machinery and protection against imports. But these efforts
produced meager results. Peter Mansfield noted
By the end of the 1960s some 180 small firms had been licensed, about half
of them related to the building industry and the rest in food processing,
clothing, and printing. Of the eight thousand so-called manufacturing
establishments at that time, 90 percent were no more than workshops
employing two or three people-bakers, shoemakers, carpenters, etc. 55
The manufacturing sector comprises 14 percent of the Kingdom's labor force (Table 3:3).
Given these factors, Saudi industry proceeded slowly and depended on state cosponsorship.
The industry fed directly or indirectly on government expenditures and
subsidies rather than being itself a major source of government revenues through taxation.
For example, by the mid 1970s, there were only 300 factories in the country, with a total
capital of $100 million. Due largely to state incentives and subsidies, the number of light
or conversion industries rose to 600 establishments by 1982 with a total capital value
approximating $7 billion. These industries were mainly, small-scale establishments
(occupying smaller industrial plants manufacturing items including door-frames, furniture,
and nails) whose owners essentially imported most of the raw materials for industrial
assembly for the local market and relied on foreign expatriates for labor. Moreover, these
small-scale and medium size industrial businesses were given priority to supply public
project needs. The private sector grew heavily dependent on the state; yet despite its great
backing, the private sector's contribution to the national gross product was estimated at
only 37.8 percent. According to the Fifth Development Plan,
Over the last four plan periods, the government sector has accounted for
between 55 percent and 75 percent of the total investment in the economy.
Furthermore, much of the remaining investment, which was undertaken by
the private sector, was financed by government development agencies.
Although the private sector has accumulated substantial financial assets as a
result of strong economic growth in the past, only a relatively small fraction
has been invested within the Kingdom. 56
The meager involvement by the private sector was attributed to, first, the provision of
interest-free loans by the government, as opposed to those offered by private institutions,
and secondly, to the "difficulties of finding viable new investment opportunities, given the
relatively small domestic market." 57 The slow response by private capital was attributed to
the difficulty to switch "speedily and successfully from government-led economy based on