JEDDAH, 20 January 2003 — It could take 25 years for Saudi Arabia to reach developed country status, Professor Richard Vietor of the Harvard Business School warned a packed audience at the Jeddah Economic Forum yesterday.
“The Kingdom’s level of investment is at 17 to 21 percent per year, whereas in some countries in South Asia it is at 30 percent. It is the latter figure that the Kingdom should be striving for,” he added.
It was clear on the second day that the JEF has become a crucial platform for the exchange of policy ideas as the Kingdom tackles its ailing economy and introduces greater transparency in the light of its cautious embracing of globalization.
The panel discussion at which Professor Vietor spoke, which also included Minister of Finance and National Economy Dr. Ibrahim Al-Assaf among others, discussed the many challenges facing the Kingdom’s economy.
The negative impact which any US-led war against Iraq would have on the region’s economic development quickly emerged as a main theme.
“Military spending is expensive and has hindered economic development in the past,” Professor Vietor replied when asked by a female questioner about how developing countries can achieve economic growth when they are forced to cater to costly military operations.
However, Jordan’s Minister of Planning Dr. Bassem I. Awadallah expressed a different view on the specific issue of the relation between war and economics in recent Middle Eastern history.
“Arab governments in the past have used and abused the Arab-Israeli conflict as an excuse not to develop an economic framework that works,” he declared, “and I don’t believe the superpowers are forcing Arab countries to spend on defense.”
Dr. Assaf spoke at length about the Kingdom’s need for transparency, especially when it comes to the essential information like statistics.
“In the past we have had problems with accurate statistics, but by next year we will have everything from unemployment, to inflation to the country’s GDP,” he stated.
The minister pointed out that the Kingdom’s economy is divided into three main sectors — government, private, and oil — and the private sector has been growing in the last 20 years. “As far as the government sector is concerned, I think it would be better if it doesn’t grow,” he added.
Earlier in the day, Jordanian Prime Minister Ali Abu-Ragheb delivered a keynote speech in which he said economies across the Arab world are still stagnating. Arab economies, he said, need to adapt and fully link in with international economic environment if they are to grow. Jordan was doing this, he added.
Last week, Jordan joined Egypt, Tunisia and Morocco in agreeing to create an Arab Free Trade Zone specifically to help increase exports into the EU. As it is, it expects a growth rate of 5.5 percent this year, compared to less than one percent in Saudi Arabia. Its position as a major Arab success story was attributed by Abu-Ragheb to its decision to embark on an inter-linking package of major legislative, judicial, educational, fiscal and administrative reforms. He made particular emphasis on education so as to produce the skills the economy needs.
Also at the forum was Pakistan’s Minister for Industries and Production, Liaquat Ali Jatoi, who said that the new political government is adopting investor friendly and liberal policies.
Syed Hamid Bin Syed Jaffar Albar, the Malaysian minister of foreign affairs, detailed his country’s phenomenal history of growth.
“To grow and handle the challenge of globalization, you need to have a vision and to develop considered, practical and appropriate responses to it,” he said.
Malaysia, he explained, dedicated 20 percent of the GDP to education, involving the culturally diverse local population and sending abroad at any one time 50,000 students. “We had to gather knowledge,” he stated.
He identified as a key feature in Malaysia’s development the potentially controversial decision to adopt English as the national language facilitating worldwide communication with clients and suppliers.
“It’s now widely seen in Malaysia as one of the best policy decisions we ever made,” he said. “The government has been responsive to the needs of the private sector but be sensitive to justice.”
“Growth involves many challenges,” he continued. “Sometimes though, you have to give something up. Saudi Arabia has the education system, the infrastructure — now you need the political will.”
— Additional reporting by Roger Harrison
