(Solution) 7C001 Question 4: Long-term economic trend affecting country

Solution

Question 4: Long-term economic trend affecting country

In Saudi Arabia (KSA) which is the country of focus, an economic trend in place is economic diversification. According to Al Naimi (2021), this is part of KSA Vision 2030 intended to enhance transformation of KSA Economic framework.  This is while enhancing a successful transition from an oil-dependent economy. The significance of the trend include;

Sectors Diversification and increased Job Opportunities

In KSA, for achievement of Vision 2030, a successful transition of the rest of the economic sector apart from oil and gas. As evidenced in Alzubair (2021), other sectors are growth such as tourism (30% increase), renewable energy (ranked 3^rd globally for renewable energy) and entertainment. Recently, NEOM and Qiddiya have been introduced as an economic hub to pursue KSA Vision 2030 (Al Naimi, 2021). The rationale of developing these projects is for increasing job opportunities for youthful population in the country. According to Houfi (2021), KSA has initiated modernised industries for fostering entrepreneurial growth, Foreign Direct Investment (FDI) and Small and Medium Enterprises (SMEs). The outcome of the trend hence contribute to existence of strong and sustainable economy with optimum performance despite unfavourable economy challenges internationally.

Renewable Energy and Sustainability

As a result of the identified economic trend, it has lead to initiation of Saudi Green Initiative core area of Vision 2030. According to University of Oxford (2024), this is for achieving Net-Zero carbon Emissions by year 2030. In year 2022 for instance, Saudi & Middle East (2024) noted that 17 new environment-focused initiatives had been introduced.  The rationale of this is to scale KSA ambitions for creation of green future. In 2024, the Sakara Solar Plant Project and Mega-Projects (Beutel, 2020) have been targeting to achieve their energy requirements lowering carbon intensity. These developments are intended to enhance their initiatives for leading to climate change and also increasing potential investments by international players in Environment, Social and Governance areas (ESG).

Attraction of Foreign Direct Investments (FDI)

Considering the economic diversification trend, it has contributed to an increase in the number of foreign direct investments with Invest Saudi (2024) report ranking KSA 3^rd in FDI stock growth amongst the G20 countries in 2023. Further, the strategic goals intending to develop infrastructure, digitisation of economic operations and increased L&D opportunities promote how competitive the country is amongst their international peers (McPherson-Smith, 2021).

Further, the Saudi Investment Promotion Authority (SIPA) has been initiated for promoting investments and encouraging international organisations in investing in KSA (UNCTAD, 2024).  According to Almutairi (2023), the success of this is informed by policies which have been passed for improving governance and good environment initiated for business. Other than enhancing economy development, FDI similarly inject new technologies and innovativeness to an economy.

Therefore the economic diversity as set in Vision 2030 is characterised with innovativeness for economic growth strategy in KSA (Chowdhury et al., 2021). Prioritising on sustainable development, innovativeness and integrating this to international economy with KSA hence a sustainable economy. The success of this trend is evidenced by the current transition from over-relying on oil and gas and leverage on opportunities in other sectors. As part of Vision 2030, the organisation would enhance economy diversity playing a critical function on growth, develop and  political stability (Al Naimi, 2022).

Significance of Economic Diversification for Mining and Exploration

Today Significance………

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