As the long summer day’s heat beats on us and the pace of work slows, it is always a good time to pontificate what is going around us, especially in the economy and the stock market.

The volatility in the stock market seems to have subsided. Today the market is moving more sideways then up and down. It is extremely difficult of course to make money in a market moving side-ways. Investors appear content to a slow moving market rather than the roller coaster ride of the past six months. Discussions at social gatherings are no longer dominated by the news of the stock market and stock picking gurus no longer dominate conversations. It feels like a breath of fresh air to again enjoy a normal conversation, rather than discussing the strategy of a big “Hamour” and how they will corner the market.

News of the economy and development activities on the other hand is dominating the headlines in different financial press. So what is going on with the Saudi economy? The Saudi economy is becoming the envy of the world. Increasing demand for oil consumption both from the developed and emerging markets, along with the high price of crude have resulted in huge budget surplus. GDP growth is very attractive and future growth continues to be sustainable. The inflation rate is 0.5 percent and is very low compared to other countries especially within the region. Housing price both for owner occupied and rentals are very stable and relatively low. The Saudi population is young and growing. The appetite for consumption for consumer durables is increasing.

Given this positive scenario, what seems to the biggest challenge to the economy that can be sustained with high degree of predictability? I remember attending a seminar at a very prestigious university in the United States. The seminar was addressing the issue of “Quality in the Workplace”. Speaker after speaker addressed the audience, emphasizing the importance of the work force, their productivity and quality of performance. If you look at any products at the market place and breakdown its components, i.e, labor and materials, the evidence is clear that labor productivity and efficiency is becoming a critical element. In today’s global economy, manufacturers are not necessarily looking at cost of labor, but the quality of labor. Consumers are becoming more knowledgeable about their consumption habits and are quality conscious.

I am trying to drive home a point. As Saudi Arabia’s economy grows and its young population enters the labor force, the real engine to this growth will be the capacity and capability to properly utilize human capital. We have been lucky to be endowed with rich natural resource, but we are also lucky to have a vibrant young human capital. Our ultimate growth will be driven by our ability to properly train and harvest out human capital. If we look around the world many of the richest countries have far fewer natural resources but have found ways to maximize the productivity of their human capital.

Many of us today sit around “cup of coffee/tea” and talk about how economies driven by knowledge, technology, bio-tech, information, and how they have captured the world’s imaginations. Each of these happening is within our grasp. The challenge is “how do we energize our young to aim for such accomplishment”. Education, perseverance, risk and entrepreneurship. When we read about mega-projects with huge SR (Saudi riyal) to be spend, the question pop-up what and how they will create jobs and the quality of the jobs at stake. Universally it is acknowledged that small business operators create more work opportunities. What is the marginal utility of each SR invested between large and small projects?

Where are our young entrepreneurs and how are they maximizing their economic aspiration during this economic boom. What we need is an alternative to the Internet, information or the bio-tech boom that brought excitement to Western economies with our own Saudi boom.

(Faisal Alsayrafi is president & CEO of Financial Transaction House.)