This case discusses the economics behind Kingdom of Saudi Arabia’s (KSA) decision to allow women to drive in the country. On September 26, 2017, in a landmark decision by Saudi King Salman bin Abdul Aziz Al Saud, a decree was issued allowing Saudi women to drive motor vehicles. Previously, women were banned from driving in the Kingdom, the only country in the world where such limitation on female mobility still existed. The decision to lift the ban was part of Crown Prince Mohammed bin Salman’s (MBS) long-term reform plan ‘Vision 2030’ to wean the economy off its oil dependence and increase the number of women in the workforce. Considered as a step toward greater gender equality and female empowerment, the reform has a profound economic impact also. Lifting the driving ban removes a major obstacle to women joining the labor market, boosts entrepreneurship, and benefits the specific automobile-related sectors – such as insurance, finance, driving schools, and car companies. The decision also improves the global perception of KSA, thereby attracting greater foreign investment.

However, the obstacles to economic change are many. KSA’s existing infrastructure is likely unprepared for a surge in car use, which could lead to greater traffic congestion. And rather than boosting local car production, the reform could lead to a surge in car imports, weakening the country’s economic position. The future employment prospects of the roughly1.38 million foreign drivers who work for women is uncertain. One of the major challenges would be changing traditional values and cultural beliefs. While the decision holds the potential to increase the work force participation of women, the speed of such participation will be greatly determined by the related social and cultural changes within the family and society. Moreover, there are fears that the full potential of this reform might not be realized as long as male guardianship laws continue in the country. .

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Issues

The case is structured to achieve the following teaching objectives:

	Understand the importance of economic diversification and the need for diversification of the Saudi Arabian economy.
	Understand the economics behind KSA’s decision to allow women to drive.
	Analyze the impact of Saudi women driving on female employment and disposable incomes.
	Identify the challenges faced by the Saudi government in implementing the reform.
	Understand the feasibility of the driving reform plan in the long run and identify whether such initiatives could help the country develop into a non-oil economy.

Contents

INTRODUCTION

SAUDI VISION 2030

DRIVING THE WHEEL OF CHANGE

Keywords

Economic Diversification; Economic growth; Development; Planning; Female Labor Force Participation; Saudi Vision 2030; Gender; Hofstede’s Cultural Dimensions; Production Possibilities Curve; Public policy; Automobile industry; Ride hailing services

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