Saudi Arabia: Enigmas of a Rentier Economy

Although petroleum revenue has been pouring into the desert kingdom of Saudi Arabia for almost forty years, the country remains underdeveloped. Few linkages exist between the modern oil sector and the rest of the economy, which is based largely on subsistence farming and nomadic animal husbandry. Dualistic economies are admittedly characteristic of most of the developing countries of the Third World, but the absence of economic integration merits explanation in a country which has long had the financial means to pursue a more balanced policy. The ease with which Saudi Arabia has obtained its income may paradoxically explain its lack of development, since most of this income has been of a rentier nature, accruing from the possession of one scarce resource—petroleum. Today the country presents an almost perfect example of a rentier economy, a state with high consumption but little production, large incomes but no necessity to work for these earnings.