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Econ Development - Problem Set 2

Econ Development - Problem Set 2 - Casey Dynan EM 284...

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Casey Dynan EM 284 Professor Hays September 25, 2007 Problem Set 2 (Ch. 3 and 4) 1.1 Do you consider Saudi Arabia to be developing along the lines of a capitalist or socialist model of development? What evidence can you cite to support your answer? Capitalist model of development. The Kingdom has adopted a free market economic model. The financial, industrial and trade sectors of the economy have made rapid progress, enabling the private sector to play an increasingly important role in the development and diversification of the economy, especially in the fields of construction and farming. However, the majority of the Saudi population is very conservative as opposed to current King Abdullah. Abdullah is much more open to capitalism and the west. However, some of his brothers (some whom might be the next king) look less favorably on the West and capitalism. Most people in Saudi Arabia associate capitalism with the West and associate the West with the breakdown of religion and society. Islam and the Qu'ran have a large sociological impact on the country. According the The Economist's Democracy Index, the Saudi government is the tenth most authoritarian regimes in the world. There are no recognized political parties or national elections, except the local elections which were held in the year 2005 when participation was reserved for male citizens on. The king's powers are theoretically limited within the bounds of Shari'a and other Saudi traditions. He also must retain a consensus of the Saudi royal family, religious leaders, and other important elements in Saudi society. The government is attempting to promote growth in the private sector by privatizing industries such as power and telecom. Saudi Arabia announced plans to begin privatizing the
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