Development Plans in Saudi Arabia

Development plans in Saudi Arabia are the socio-economic development plans that the Ministry of Economy and Planning was responsible for developing, managing, and preparing at the sectoral and regional levels, both in the short and long term.

These plans represented a strategic response to Saudi national ambitions for long-term growth and development. Therefore, the role of development planning in the Kingdom of Saudi Arabia has been defined since the issuance of the first development plan in 1970-1971, in creating the intellectual, practical and organizational framework for development processes in its three dimensions: economic, social and organizational.

Launching Development Plans in Saudi Arabia

Development plans were launched to move Saudi Arabia from the stage of a developing country to that of a developed one. Therefore, the beginning came in the economic field by building basic equipment, especially industrial and agricultural equipment, ports, roads, and electricity. In the social sphere, the development plans took into account the desires, ambitions and capabilities of Saudis. They paid special attention to establishing a free education system and expanding it to promote equality of opportunity, and worked to establish a comprehensive system of free health and social services. In terms of the organizational dimension, the state established the institutional framework required for economic and social development processes by creating new ministries and departments and developing existing administrative bodies.

Many details related to the implementation of projects, programs, and initiatives were carefully considered at all stages of the preparation of development plans. This gave development planning in Saudi Arabia its distinctive features by adapting each plan to the conditions of its respective stage, enabling it to deal flexibly and efficiently with changing variables and developments, and to pave the way for subsequent plans. This approach became the basis for determining the main pillars and axes of each plan, ensuring the continuity of development work.

The premises for the preparation and implementation of development plans have become oriented toward the state’s goals of maximizing national ambitions to achieve comprehensive and sustainable development. Therefore, the general objectives, as summarized by the Council of Ministers in 1969, stipulated: increasing the GDP growth rate; developing human resources to enable different segments of society to enhance their productive contribution and participate fully in the development process; diversifying the sources of national income; and reducing dependence on oil by increasing the contribution of other productive sectors to GDP.

Saudi Arabia's First Development Plan

The preparation of the first development plan began under relatively critical economic conditions, which posed a significant challenge. The developmental situation during the period preceding this plan can be understood through three main characteristics: First, the expansion and steady improvement of the administrative apparatus. Second, fiscal pressures and constraints on domestic development due to external factors, particularly the relatively limited demand for oil, wars, and political instability in the Middle East. Finally, the continuation of moderate economic growth and overall development. This period also witnessed a rise in state revenues whereas total state income remained below USD4 million annually until 1945, then increased by 1949 to USD85 million.

The increase in revenues contributed to achieving a financial surplus, making 1949 a turning point in Saudi Arabia’s development history, as it marked the beginning of an era of major new projects and the country's assumption of a new role in organizing and directing the economic development process. With the increase in oil production and revenues, the first official budget of Saudi Arabia was prepared in 1948–1949.

Saudi Arabia's economy was primarily dependent on oil revenues. However, with the rise in oil prices during the first and second development plans, it witnessed a series of rapid development steps driven by high international oil prices, which generated large returns. The continued increase in these revenues during the period of the third development plan created favorable opportunities for rapid growth in government spending, leading to high investment rates in most sectors of the national economy.

Second Development Plan in Saudi Arabia

Although the preparation of the first development plan (1970–1975) took place at a time when Saudi Arabia was facing severe financial obstacles, the second development plan (1975–1980) was prepared under conditions of financial independence achieved through oil revenues. This ensured full coverage of government expenditures and imports. The second plan focused on four main aspects of development: infrastructure and construction, hydrocarbon resources, administration, and the private sector.

Therefore, the main objective of the third plan was to expand the establishment of basic infrastructure systems and lay the foundations for a more diversified national economy. The government sector began to invest heavily in capital-intensive industries linked to Saudi Arabia’s oil resources, while the private sector played a major role in manufacturing industries, and agriculture emerged as a leading sector for growth.

Each plan began to define its priorities more clearly with the emergence of ambitious development features across all Provinces of Saudi Arabia. Accordingly, the strategy of the Third Development Plan included basic medium-term goals, including: changes in the structure of the economy, increasing economic and administrative efficiency, and enhancing participation in development and social welfare.

Continued Preparation of Development Plans in Saudi Arabia

The preparation and implementation of development plans continued in a way that allowed each plan to build on the achievements of its predecessor, resulting in comprehensive developmental progress that supported economic diversification. This was also evident in the fourth development plan, which was characterized by the completion of most of Saudi Arabia’s basic infrastructure. It reinforced the economic diversification priorities introduced by the third plan, with strong emphasis on restructuring the economic framework so that the private sector could play a leading role in the development process.

The Fifth Development Plan continued the approach of comprehensive and balanced development across various provinces and was prepared to strengthen and expand the main objectives of previous plans. It also placed high priority on the role of the private sector, along with supportive regulatory policies, to achieve economic diversification, with a particular focus on new initiatives.

The Sixth Development Plan focused on increasing the role of the private sector in diversifying the economic base and reducing dependence on oil revenues. Accordingly, the plan emphasized three main objectives: Developing human resources by expanding the capacity of universities, other educational institutions, vocational training centers, and technical colleges; Achieving economic efficiency in both the public and private sectors; Enhancing the role of the private sector by encouraging investment to increase its contribution to development and initiating privatization programs.

The Seventh Development Plan expanded its strategic directions to address development across Saudi Arabia while considering local and international challenges. The plan gained special significance as it came at a time when the national economy had completed a full-century cycle. Its focus areas derived their basic directions from the approved general objectives and strategic foundations, with particular attention to the most important local and international issues expected during the plan period.

Saudi Arabia's Economic Progress in Indicators According to Development Plans

The national economy reached an advanced stage of growth and international competitiveness, with positive outcomes across several indicators due to effective development planning. During the eighth development plan, it achieved strong growth reflected in GDP, capital accumulation, foreign trade, balance of payments, human resources development, private sector contribution, and financial and monetary performance.

With increasing financial returns and the Saudi economy rising to a prominent position among the world's economies, development plans continued to expand their projects. In this context, the ninth development plan allocated approximately SAR1,444.6 billion to development sectors, representing a 67 percent increase over the eighth plan. The human resources development sector accounted for 50.6 percent of total allocations, followed by the social development and health sector with about 19 percent.

Saudi Arabia's collabration of Development Plans with International Organizations

Saudi Arabia collaborated with international organizations to advance the Millennium Development Goals and was able to exceed initial targets in achieving several key objectives, including: ensuring that all children, boys and girls, have access to primary education; reducing maternal mortality at birth; and halting the spread of HIV and beginning to reduce its prevalence.

With regard to sustainable development as one of the main goals in the contemporary world, the Saudi Vision 2030 framework and other state programs and policies have provided a solid basis for implementing its agenda, while work is underway to align the goals of sustainable development with Saudi Arabia's specific circumstances, and further alignment and integration is expected to be achieved with the integration of sustainable development goals and indicators into the government's action plans and detailed programs that are being prepared and refined within the framework of Saudi Vision 2030.

Long-term Plans for a Prosperous Economy in 2030

Since its launch on April 25, 2016, Saudi Vision 2030 has placed a prosperous economy at the forefront of its goals. The vision outlines long-term plans to elevate Saudi Arabia to one of the world’s largest economies, investing in promising economic sectors to enhance diversification and privatize selected government services. It also aims to create an environment that fosters business potential, expands the economic base, and provides job opportunities for all Saudis. This is to be achieved by leveraging Saudi Arabia’s unique location and resources, attracting top talents, and encouraging global investments.

Saudi Vision 2030 targets include increasing Saudi Arabia's non-oil GDP from 18.7 percent to 50 percent, increasing the contribution of foreign direct investment to GDP from 3.8 percent to 5.7 percent, increasing Saudi Arabia's ranking in the Logistics Performance Index from forty-ninth to twenty-fifth, increasing the private sector's contribution to GDP from 40 percent to 65 percent, and expanding the Public Investment Fund's assets from SAR600 billion to more than SAR7 trillion.

The targets also include raising Saudi Arabia's ranking in the Global Competitiveness Index from twenty-fifth to the top ten, raising Saudi Arabia's economic position from nineteenth to fifteenth, increasing the localization of the oil and gas sector from 40 percent to 75 percent, increasing the participation of women in the labor market from 22 percent to 30 percent, increasing the contribution of SMEs to GDP from 20 percent to 35 percent, and reducing the unemployment rate from 12.3 percent to 7 percent.