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More than Oil to Saudi Arabia: The Economic Cities October 8, 2008

Posted by jgarciaalvarez in Colombia, Competitiveness, Emerging Markets, Entrepreneurship, Innovation, Latin America.
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Few people would be surprised to know that the production of oil and gas in Saudi Arabia is equivalent to each national citizen producing 0.7 barrels of oil per day. With 23.5 million citizens and approximately 5.5 million non-nationals, it is understandable that experts envision Saudi Arabia having oil revenues between $2.8 and $5.5 trillion in the period 2007-2020 due to oil prices between $50 and $100 a barrel [1].

Maybe half of you then, would be surprised to know that, unlike previous periods of booming oil prices, a significant share of today’s wealth is targeting domestic investments. The McKinsey Global Institute suggests that betwee and ¼ of the money will be deployed domestically. These investment rates are aimed at getting the “economic house in order”, diversifying the oil-based economy, funding educational initiatives, generating jobs, increasing government salaries, and building infrastructure and new vibrant cities.

Perhaps a larger number of you then, would be surprised to know that Saudi Arabia has an innovative strategy to boost the Kingdom’s competitive environment and to attract domestic and foreign investment.

The Economic Cities, is a cluster-based program designed to establish 6 integrated cities (“live, work and play” concept) expected to collectively create by 2020 over 1.5 million jobs and livable conditions for more than 2.5 million residents. 

This public-private partnership strategy is led by the Saudi Arabian General Investment Authority (SAGIA) and intends to decentralize and balance Saudi’s economy. As Mr. Amr Bin Abudllah Al-Dabbagh, Governor, SAGIA, suggests, these cities are not “free zones”, “zonas francas” or “economic zones”, these are vibrant urban centers with living environments and service provisions.

The six cities are King Abdullah Economic City (KAEC in Rabig), Prince Abdulaziz Bin Mousaed Economic City (PABMEC in Hail), Knowledge Economic City (KEC in Medina), Jazan Economic City (JEC in Jazan), Tabouk Economic City (TBD), and Eastern Province Economic City (TBD).

The KAEC, with an area of 168 million sq m, is the largest of these centers focused on massive port infrastructure, light industry, and services, including logistical and financial. The PABMEC, with an area of 156 million sq m, intends to become the largest transportation, logistics, and supply chain hub in the Middle East. The KEC, with an area of 4.8 million sq m, plans to build a large technological park supported by advanced academic and research institutions, as well as to develop an Islamic civilization studies centre. The JEC, with an area of 100 million sq m, seeks to anchor diverse industries such as desalination, refining oil, aluminum, copper, food processing, and regional agricultural producers.

Saudi Arabia has a vision for the next years. Take advantage of its abundance of low-cost energy and strategic location to build the foundations of a modern economy. A mission accomplished will then prove there is more than oil to Saudi Arabia.

Food for thought…

  • What lessons can political and business leaders in Asia, Africa, South Eastern Europe, and Latin American, draw from The Economic Cities’ experience?
  • What commercial or trade opportunities will exist for the expansion of Colombia’s products and services into the Middle East?
  • How can small and medium enterprises across emerging markets leverage this opportunity to achieve size and scale?


[1] The McKinsey Quarterly, “Investing the Gulf’s oil profits windfall”, May 2008, & Author analysis.

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Comments»

1. http://tinyurl.com/choukeel38453 - February 7, 2013

“More than Oil to Saudi Arabia: The Economic Cities
Entrepreneurial Growth Culture” was in fact a fantastic
article. If merely there was alot more websites just like this specific one
on the internet. Well, thanks a lot for your precious time, Kristie

2. Rory - April 17, 2014

It’s hard to come by experienced people in this particular
topic, however, you sound like you know what you’re talking about!
Thanks


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