The Road to Reform: Economic Impact of Women Driving in Saudi Arabia

Case Code: ECON073
Case Length: 21 Pages
Period: 2016 – 2018
Pub Date: 2019
Teaching Note: Available

Price: Rs.500
Organization : -
Industry : -
Countries : Saudi Arabia
Themes: Economic Growth, Diversification

Introduction

"I think our society is ready," said Crown Prince Mohammed bin Salman (MBS) of Kingdom of Saudi Arabia (KSA) while legalizing women drivers as part of 'Saudi Vision 2030,' a blueprint put forward by the Saudi government to reduce the country's dependence on oil, diversify its economy, and modernize the society. For decades, KSA had been the only country where women were barred from driving. On September 26, 2017, KSA’s King Salman bin Abdul Aziz Al Saud (King Salman) issued a historic royal decree allowing the granting of driving licenses to women in the country from June 2018. With this, Saudi women would be able to legally apply for their own driving licenses and drive without the presence of a male guardian. According to economists, the end of the ban could add as much as US$90 billion to the Saudi economic output by 2030.

The decision to allow women to drive was hailed globally as a step forward for women's rights in the ultra-conservative kingdom. According to analysts, the reform would likely lead to significant long-term changes in KSA’s economy including an increase in the participation of women in the labor force, rise in disposable incomes of families, and a surge in car sales. The move also aimed to reduce the gender gap in the country, boost KSA’s global image, and aid in attracting foreign direct investment. On the other hand, some analysts felt that the move was likely to reduce the number of expatriate workers, increase traffic jams, and the demand for fuel.

Some analysts, however, felt that the long-term effects of ending the ban were far from clear and would present the Saudi government with several policy challenges. Adding millions of new drivers into a chaotic and congested road network would lead to more accidents in the country, they said. Some analysts felt that the driving reform was meaningless as long as the strict male guardianship laws persisted in the country, hindering and in some cases nullifying the efficacy of the reform. Some critics even remarked that KSA had lifted its ban on women driving because of economic necessity rather than a growing commitment to women's rights. They wondered how the new rules would work in relation to other restrictions and a culture that often discouraged risk-taking and innovation. "The decree was a significant advance for gender equality in Saudi Arabia, but it is too early to declare a total victory. Social and cultural resistance to female employment will take some time to fully wind down," said Frank Kane, a business journalist.

Can ‘Vision 2030’, of which the decision to allow women to drive was a part, make a significant impact in transforming the country from a petro-state to a diverse, productive economy capable of growth? Can the reform spur meaningful change in a society long characterized by deep religious conservatism and a heavy dependence on the state? Is the end of the driving ban more of a public relations move than an actual change in the right direction for women in the country?

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