export markets in order to attain economies of scale and competitive prices relative to imports. Thus, the Saudi manufacturing sector historically has needed subsidization from the public trough except mainly for those intrinsically small enterprises that are domestically oriented and relatively insulated from foreign competition.
The government role in the Saudi economy is pervasive, yet pro-capitalistic.3 Because the oil industry is state-owned, the massive oil revenues accrue to public and joint public-private entities, thereby providing major direction for the economy as a whole. Regulation is relatively benign except for foreign investment and trade, which is autarkic overall (i.e., protectionist). Pro-business tax incentives and subsidies (e.g., interest-free loans) are also employed in targeted sectors (e.g., small business). Thus, Saudi Arabia's economy is an amalgam of government ownership and control and free markets that is oriented toward nationalism, growth, and diversification.
Finally, the lack of indigenous Saudis actually working in her economy is significant.4 Sixty percent of the labor force is foreign, with managerial and technical jobs largely in the hand of Americans and Europeans and lower-level work done mostly by Yemenis, Egyptians, Palestinians, Koreans, and Filipinos. There are an estimated three million foreigners in the kingdom, vs. several million Saudis. As to the reasons for importing so much labor, they include lack of managerial and technical skills for high-level employment, and a general disdain for blue collar work by the kingdom's natives. This situation has led to a government policy of "Saudiization," whereby more Saudis are being trained and hired to replace foreigners.
Saudi Arabia is the largest exporter of petroleum to international markets in the w
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