The Road to Reform: Economic Impact of Women Driving in Saudi Arabia
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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 |
Abstract Case Intro 1 Excerpts
Excerpts
Saudi Vision 2030
KSA is the largest country in the Middle East and constitutes most of the Arabian Peninsula (See Exhibit I). The country had a population of 31 million people as of 2017. It has 16% of the world’s proven oil reserves. In 2017, the petroleum sector accounted for roughly 87% of budget revenues, 42% of GDP, and 90% of export earnings. Over the decades, a plentiful oil income had allowed the country to build an extensive welfare system, which provided citizens with well-paid jobs in the public sector. This model worked well as long as the population was small and the oil income plenteous. However, oil prices plummeted in 2014 causing a negative impact on the Saudi state income...
Driving the Wheel of Change
KSA, home to Islam’s holiest sites Mecca and Medina, was an absolute monarchy ruled according to Shariah law . KSA followed ‘Wahhabism’ a fundamentalist sect of Sunni Islam on which most Saudi laws were based. The ideals of this strict form of Islamic law placed emphasis on male guardianship of women. Under the system, a woman remained a legal dependent irrespective of her age, education level, or marital status. She needed a male guardian – a father, uncle, husband, brother or son – to consent to a variety of basic needs. The male guardianship laws had a substantial impact on the lives of Saudi women and its economy, with the country ranking 138 out of 144 in the 2017 Global Gender Gap Report by the World Economic Forum on gender parity (See Exhibit VI). Reportedly, women who attempted to flee abusive families either faced imprisonment or were forced into shelters...
Economic Impact
Experts opined that the reform was not only a big move toward gender equality in KSA but would also have a profound economic impact. The move could add as much as US$90 billion to the economic output by 2030, suggesting a potential rise in the country’s GDP by 0.4%-0.9% each year until then...
Challenges
Some analysts said the measures taken by the Saudi government to empower women, including lifting the ban on women drivers, would be slow as one of the major challenges would be changing traditional values and cultural beliefs. According to them, ending the ban on women driving would meet with some resistance within the country where families were highly patriarchal and deeply conservative...
The Road Ahead
The progressive reforms adopted by KSA were acknowledged globally. KSA’s credit rating continued to improve despite falling oil prices. Reportedly, the top ratings agency S&P Global Ratings had given a stable outlook to the country expecting that moderate economic growth would continue through 2021, supported by rising government investment. . According to a report by the International Monetary Fund (IMF), KSA’s real GDP was expected to increase to 1.9% in 2018 underpinned by non-oil growth, which was projected to strengthen to 2.3%....
Exhibits
Exhibit I: Saudi Arabia: Key Economic Indicators (2016-2019)
Exhibit II: Saudi Arabia: Oil and Non-Oil Revenue Contribution
Exhibit III: Saudi Arabia: GDP Growth
Exhibit IV: Brent Crude Oil Prices (January 2014 – January 2016)
Exhibit V: Goals of Saudi Vision 2030
Exhibit VI: Distance from Gender Parity by Region
Exhibit VII:How Move on Allowing Women to Drive is viewed among Saudis
Exhibit VIII:Private Driving Licenses Issued in KSA
Exhibit IX:Market Share of Automobile Companies in KSA
Exhibit X:Gender Imbalance in Labor Force participation among G20 countries (15-64 year olds, 2015)
Exhibit XI:Saudi Arabia: Population by Nationality (Saudi/ non-Saudi), Sex and Relation to Labor Force (August 2016)
Exhibit XII:Saudi Arabia:Female Labor Participation Rate
Exhibit XIII:Non-Saudi Domestic Workers by Sex and Main Groups of Household Occupations (Q1, 2017)
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