The role of the government incentives policy in the development of the private sector in Saudi Arabia.
2015-11-19T09:10:29Z (GMT) by
Government, in Saudi Arabia, has been the dominant sector in the economy. Funded by high revenues from oil and pressed by the need for economic development at a time when a vigorous indigenous private sector was virtually nonexistent, the government found itself, willingly or unwillingly, at the center of the development process, as a planner and implementer. The government's interest in achieving a diversified economy, which does not depend solely on the oil sector, has led to the introduction of many types of incentives such as, procurement, subsidies, concessionary loans, and awarding of infrastructure contracts. The aim of these incentives has been to stimulate and improve private sector investment. It can be said that the private sector in Saudi Arabia has developed much more after the provision of the incentives, particularly in the agriculture sector. Nonetheless, no study has been made to evaluate these incentives and find out their role in the development of the private sector. Thus, this study aims to provide a comprehensive survey of the incentives policy in Saudi Arabia and to evaluate its impact on the development of the private sector, which is the target sector. The methodology adopted in this study has involved three aspects of research : a) Theoretical aspect: this involves reviewing the theoretical side of the relationship between the incentives policy and the desired economic objectives. b) Field research aspect: this involves designing a questionnaire and an interview directed to the private sector's establishments and businessmen, respectively. c) Regression aspect: a time-series regression analysis concerning the impact of government expenditures, in general, and the incentives, in particular, on the private sector investment and output, has been carried out.