History of Economic Exchange between Saudi-Arabia and Korea, with Suggestions for Better Collaboration in the Future
by Kim Hyun Ho, Fall 2005


Abstract

Originally planned to show the cultural, economic, commercial, and political exchange between Korea and the Arab world until today, the research paper narrowed down its focus from the Arab world to Saudi Arabia, from various aspects of exchange to economic interaction between the two nations. Thus, this special research paper was renamed as "Development and Globalization of Saudi Arabian Economy with Special Analysis of Korean Businesses in Saudi Arabia and Suggestions for Better Successes in the Future." The paper completed under the guidance of Alexander Ganse will first investigate the historical development of Saudi Arabian economy since 1902 and then specifically analyze the economic globalization of Saudi Arabia in the 1990s based on materials from individually collected Korean newspaper articles and few booklets showing statistics related to Saudi Arabian economy.

After the paper deals with the Saudi Arabian economy, it presents a historical overview of economic exchange between the two nations. Then, it would focus on five Korean products of which Korean enterprises have succeeded in producing and selling vast amounts on the Saudi Arabian soil. The paper not only explains the reasons for these successes, but also delves further to analyze and give suggestions for better economic accomplishments in the future.


History of Economic Exchange between Saudi Arabia and Korea : Suggestions for Better Collaboration in the Future

Table of Contents

I. Introduction
II. Body
1. Development of Saudi Economy since 1902
2. The Distortion of the Saudi Economy since the 1980es
2.1 The Characteristics of Saudi Economic Structure
2.2. Stagnation of Economic Growth
2.3. Chronic Budget Deficit
2.4. Inefficient Public Enterprise Oriented Industrial Structure
2.5. Distortions in the Labor Market
2.6. Massive Outlays on Defense
2.7. Protection of Domestic Industry
3. The Process of Economic Globalization of the 1990s
3.1. Meaning of Economic Globalization
3.2. Saudi Arabias Globalization Strategy : Reducing Government Subsidies
3.3. Saudi Arabias Globalization Strategy : Expanding Privatization
3.4. Saudi Arabias Globalization Strategy : Labor Market Reform, Saudization
3.5. Saudi Arabias Globalization Strategy : Stimulating Open Policy
3.6. Evaluation of Saudi Economic Globalization
3.6.1. Level of Private Sectors Activity
3.6.2. Level of Openness
4. Saudi Economic Trends in the 2000s and Prospects of Saudi Economy
5. General Overview of Economic Exchange between Saudi Arabia and Korea until Today
6. Korean Goods in Saudi Arabia
6.1. Samsung Mobile Phones
6.2. Satellite Broadcast Receivers
6.3. Air Conditioners
6.4. LG Mobile Phones
6.5. Hyundai Motors Cars
7. Suggestions for More and Better Successes in the Future
III. Conclusion
* References


I. Introduction

Under the oil dominated economic structure, Saudi Arabia has been able to maintain its status as the leading nation in the Middle East region based on the enormous amounts of revenue from the chief resource. Since oil is a valuable resource for Korea and Korea is one of the largest oil consuming nations in the world, Saudi Arabia has been one of the most important trading partners over the last fifty years. In order to assess and evaluate the relationship between the two nations in the economic perspective, this paper will first investigate the development of the Saudi economy since the foundation of the Kingdom in 1962 and specially analyze the globalization process of the 1990s. Then, the paper would deal with the economic exchanges between Saudi Arabia and Korea. However, since Saudis exports and sales to Korea had been primarily based on oil and no other Saudi goods and corporations have made noticeable profits in Korea, the paper would mainly focus on the success and advancement of Korean corporations and businesses into the Saudi market based on the collected news reports ranging from early 1900s. And among these Korean advancements into the Saudi market, the news reports primarily centered upon the construction boom of the 1970s and the 1980s, and the recent successes of corporations producing electronic devices such as mobile phones and air conditioners.
Saudi Arabia has carried out seven five-year economic development plans since 1970 to develop and amplify infrastructures as well as derive various industries based on oil (oil-production, oil-refinery, and petrochemical industries). However, due to falling oil prices during the 1980s, Saudi economy revealed grave problems related to their economic structure. The economic growth rate dropped from 10% in the 1970s to an average 1.3% in the 1980s. This decline indicated how much the Saudi economy depended on just oil and had no other way to sustain their growth and prosperity if not for the chief resource. Thus, ensuing economic development plans have included special economic policies to diversify the economic structure in order to stabilize the economy in face of unpredictable oil prices. Also, since the 1990s under the command Crown Prince Abdullah who have been enthroned following the death of King Fahd in June this year, Saudi Arabia has planned ambitious globalization strategies to recover the dynamism of the growth. The Saudi government has been implementing a strong structural reform and open policy such as reduction of government subsidies, expansion of the private sector, labor market reform and stimulation of the domestic market. However, as the paper would later analyze these globalization strategies, they have not proved to be very effective and Saudi Arabia has not been able to attain any visible accomplishment. The substantial amount of information and statistics could be collected from various newspaper articles and reports about economic interactions between the two nations. Based on these reports, the paper incorporates various analyses of the Saudi economic structure and the economic interactions between Saudi Arabia and Korea. And the paper will finish by giving suggestions for more expansive and more mutually beneficial economic exchange in the future.


II. Body

1. Historical Development of Saudi Economy since 1902 In the mid-18th century, Saudi Arabias history unofficially began as a religious revolutionary, Muhammad Ibn Abdul Wahhab aligned with Dahriya tribes chief, Muhammad Ibn Saud. Wahhab movement, which promoted strict and austere religious lives, gained support from the Bedouins in the region and succeeded in ruling the extensive Middle Eastern territory, now called The Kingdom of Saudi Arabia. However, the Ibn Saud tribe was not able to maintain the definite influence over the region until 1902, when Abdul Aziz Ibn Saud recaptured Riyadh, which was under control of Rashid tribe at that time. He formally named the territory "The Kingdom of Saudi Arabia" in 1932 and until his death in 1952, he extended the territory further to the west.
What is noteworthy about the founder Ibn Saud is that he had foreseen the importance of oil for the future of his kingdom and set the ground for prospective oil-related projects to boost the economy. Under his command, thousands of laborers were sent to Hejaz Mountain to dig out precious metals and "Saudi Arabian Ministry Union" was established to develop the gold-mining industry. In 1932, he signed a pact with Britain to launch an oil-field development project only to be cancelled four years later. Various enterprises attempted to explore and develop oil fields later on and Aramco was the foremost company among them, which exerted the most persistent effort to the project. And in 1938, the first oil was produced by Saudi Arabia. King Faisal ascended to the throne in 1964 as the third King of Saudi Arabia. He put forth the first of the 5-year plan series, thus commencing the modernization project for his nation. Due to the decrease in United States oil production along with the increase in oil consumption from all over the world during the early 1970s, Saudi Arabias oil producing capacities gradually expanded and reached its maximum level. This indisputable oil power provided an opportunity for Saudi Arabia to elevate their status to the international stage.
While the first 5-year economic development plan helped establish fundamental infrastructures and enhance human power, the second 5-year plan conducted under the rule of King Khalid aimed at overcoming obstacles to founding basic industries. Using the enormous wealth obtained from oil production, the fourth king of Saudi Arabia invested those funds for other key industries in order to diminish the economy's reliance on oil profits. The lack of domestic manpower to realize the project left no choice but to welcome many foreign laborers to assist them.
King Fahd succeeded to the throne in 1982 and carried out the third 5-year economic plan in order to complete the establishment of key industries. However, the reduction in oil consumption by seven percent every year during the early 1980s incurred negative effects to the Saudi economy not yet prepared to stand on its own without being influenced by oil prices. This distortion of Saudi economy since the 1980s will be thoroughly investigated in the next section. The oil industry has been a basis on which Saudi Arabia could transform from a tribal nomadic society into a developing nation. However, Saudi Arabia still has difficult assignment to do in order to make a solid economy not based solely on oil.

2. The Distortion of Saudi Economy since the 1980s

2.1. The Characteristics of Saudi Economic Structure

The most peculiar and evident aspect of Saudi economic structure is that oil sector dominates the economy. Saudi Arabia has the largest oil reserve in the world with total proven reserves of 261.8bn barrels, which equals to one quarter of the world's total. Also, statistics released by EIU Country profile last year proves that Saudi Arabia is the largest producer in OPEC, accounting for 26.8% of the combined output of all OPEC members. Since the end of the Gulf war in 1991, oil sector has contributed an average of about 35% of Saudi's nominal GDP, 75% of government revenue and 85% of export revenues. In addition, most of the industrial sector's development has been strongly related to developments in the oil industry.
Saudi economic structure's another major characteristic is that the public sector controls the economy. Saudi Arabia is rather a public sector-oriented economic system than a market-oriented one. Private business heavily depends on public expenditure and most of the domestic producers have not been able to function without subsidies from the government. Economic development plans could be noted as the main means through which the state has been reshaping the economy by enormous public spending. Based on the vast oil revenues, Saudi government has been administering seven five-year economic development plans since the first one launched back in 1970. The first and the second five year economic development plan in 1970s had aimed at propelling industrialization and building oil-oriented industries and infrastructures. The third to the current seventh plan since 1980s have attempted to amplify non-oil sectors, increasing the role of private sectors, exporting more non-oil products, and opening job opportunities to Saudis.
Furthermore, Saudi Arabia possesses a substantial public sector that has expanded tremendously since the oil boom. During the 1970s and by the mid-1980s, more than thirty public organizations were established in the areas of services, education and training, and public economic corporations. In addition to that, Saudi economy differs from other typical nations that the degree of reliance upon foreign trade and government consumption is very high. Exports of goods and services usually occupy the largest percentage of GDP, accounting for 40.8% of GDP back in 2002. And as the public sector controls the economy, it is inevitable that the government consumption accounts for more than one quarter of GDP.

2.2. Stagnation of Economic Growth

The Saudi Arabia's special aspect of the macro-economic trends is that slow growth rates have been the norm since early 1980s. Thanks to the 1970s oil boom, Saudi government was able to set a five-year development plans to strengthen the infrastructure as well as derive industries based oil production, oil refinery and petro-chemicals. As a result, Saudi Arabia sustained a high 10% GDP growth per year from 1970 to 1980. In fact, Saudi Arabia was once a wealthy country. In 1981, Saudi oil revenues amounted to approximately $131 billion, making it possible for per capita GDP to be one of the highest in the world at that time. However, due to the 1980s low oil price period, oil revenues reduced and budget deficits began to accumulate every year since 1983. In consequence, domestic debts have increased rapidly over these years and this led to low levels of commercial credit, as well as significant problems in the private sectors.
Hence, the real GDP growth rate fell to an unbelievable average of 1.3% per year during eighteen long dreadful years from 1981 to 1998. Despite the recovery of oil prices in 1999, real GDP growth rate even contracted by 0.8% (Chosun.com, 1999). The 4.5% growth rate achieved in 2000, which was an outcome of a buoyant oil sector was the highest since 1991. Also, the growth in 2001-2002 decreased from 1.2% to 1%. This reduction resulted as September 11th attack in 2001 exacerbated the economic slowdown and decreased the oil output.

Table 1 : Saudi Arabian GDP growth from 1970 to 2002
years Average growth rates in %
1970-79 10.0
1980-89 0.2
1990-95 3.4
1996 1.4
1997 1.9
1998 2.8
1999 -0.8
2000 4.9
2001 1.2
Source: EIU Country Profile 2004.


2.3. Chronic Budget Deficit

Due to the considerable welfare spending and wasteful government expenditures, Saudi budget, the core of the Saudi economy, has resulted in chronic deficits. Having declined to enfranchise the Saudi people, the royal family has felt obliged to compensate the citizens in other various ways. The most important method has been to provide a diverse network of consumer services such as electricity, water and, fuel as well as many economic benefits such as free education and medical services. In the late 1990s this spending occupied approximately one fifth of the personal income of every single Saudi. As Daryl Champion wrote in the book about Saudi Arabian Kingdom, the Saudi economic structure has settled down as 'the rentier-distributive system' after the 1970s.
Also the Saudi Arabian government nationalized the biggest oil company, Saudi Aramco, which accounted for 30% of the Saudi GDP from 1973 to 1980, and established state-owned enterprises (Chosun.com, 1975). Furthermore, as a result of the establishment of state-owned SABIC (Saudi Basic Industries Corporation) and PETROMIN (Public Organization for Petroleum and Minerals) leading over thirty heavy industrial and public organizations, approximately 40% of Saudi Arabia's workforce were once employed by government sector in 1998 (Enav, Peter, 2000).
Due to the oil boom in the 1970s, the budget deficit did not appear to be a critical problem to Saudi Arabia during that era. However, with the advent of the 1980s low oil price period, chronic budget deficits took place as the current expenditures took up 87% of the total budget. Despite its enormous oil revenues, Saudi Arabia's budget ran at a deficit from 1983 to 1999, largely owing to high defense spending, government subsidies of utilities, low tax rates, and finally lower oil prices and production levels. The following table effectively demonstrates Saudi's growing budget deficits beginning with the year 1983.
Table 2 : Saudi budgetary outlays, 1980-2002
Years Revenues Expenditures Deficit
1980 348.1 236.6 -
1981 368.0 284.7 -
1982 246.2 244.9 -
1983 206.4 230.2 6.4
1984 171.5 216.4 12.8
1985 133.6 184.0 16.1
1986 76.5 137.4 22.5
1987 103.8 173.5 25.3
1988 84.6 134.8 17.6
1989 114.6 149.5 11.2
1990 154.7 210.4 14.2
1991 161.9 266.4 23.6
1992 169.6 232.5 14.4
1993 141.4 205.5 14.4
1994 129.0 163.8 7.7
1995 146.5 173.9 5.7
1996 179.1 198.2 3.6
1997 205.5 221.2 2.9
1998 141.6 190.1 9.6
1999 147.5 183.8 6.4
2000 258.1 235.3 -
2001 228.1 255.1 3.6
2002 213.0 233.5 3.0
Source: Saudi Arabian Monetary Authority, 2003.


The Saudi government tried to finance the budget deficit through domestic borrowing. However, this decision incurred a rapid rise in public domestic debts from 52% of GDP in 1992 to 118% in 1999. The percentage level fell to 87.2% in 2000 owing to the recovery in GDP and the turnaround of the deficit to surplus. By 2001, this had increased to 91.2% of GDP because falling oil prices reduced the oil revenues. In 2002, the ratio of public domestic debt to GDP rose to 97% because of a higher budget deficit. (Chosun.com, 2002)

2.4. Inefficient Public Enterprise Oriented Industrial Structure

Saudi government has settled down public enterprises oriented industrial structure by two ways. Firstly, the government nationalized the Saudi Aramco, Saudi Arabia's largest oil company. Secondly, the Saudi government established SABIC leading Saudi petro-chemical industry and held 70% of the industry's share in 1976 (Chosun.com, 1978). In addition to the two occurrences noted above, Saudi government has established over thirty public organizations including power, water resources, and banks in the course of the 1970s through the mid-1980s. Although these sectors were established to enlarge the industry and to diversify the economy by building stable infrastructures, some evaluate these moves as motivated by the desire to redistribute the increasing income in the form of services and public utilities to the citizens. Furthermore, wealthy groups, or king families, deposited lots of floating assets in overseas or arranged the budget to initiate independent entrepreneurial activities and political demands voluntarily without government intervention.
According to statistics from Chosun article, twenty-seven public organizations, including Saudi Arabian Airlines and Pension Fund, were allocated the possession of about 18%, or SR 41.2 billion among the overall Saudi government budget of SR 228.1 billion back in 2001 (Chosun, 2001). In other words, about one fifth of the overall government budget was put into these public sectors.
Meanwhile, wage ratio of the public sector had increased from 18% of GDP, 53% of government budget and 71% of oil revenues in 1994 to 23%, 60% and 92% respectively in 1999. On the other hand, labor productivity of the public sector measured by output/labor ratio had decreased to one half of 1983 (Chosun.com, 2002). The simultaneous rise in wage percentage and decrease in labor productivity, not only brought about an inefficient public sector management system, but also lessened the dynamism of growth by reducing the investment among government expenditure. The investment expenditure among the government expenditure has decreased from 16.0% in 1993 to 7.8% in 2000.

2.5. Distortions in the Labor Market

CIA estimates that the population of Saudi Arabia totaled 24.29 millions in July 2003 and out of the total population, 77% which is estimated to be 18.71 million are Saudi natives and 23% which is about 5.58 million are foreigners. 42.3% of the population is 15 year-old and below, 54.8% from 15 to 64 years old and the elders above 65 years of age comprise approximately 2.9% of the population. And the population growth rate was measured to be about 3.3% between the years 1996 and 2002 (CIA 2003, 2).
Thus, the age group of 15 and below account for 42.3% of the population and the labor force is increasing at an average rate of 4% every year. However, only about one quarter of total Saudi entrants to the job market are able to find jobs every year. On the other hand, the wage difference between Saudi nationals and non-Saudi people, who normally get paid one third of the Saudi wage, ended up in rapidly increasing unemployment of Saudi nationals.[1] This wage differential system contributes much to the generally poor work ethic of the local Saudis, who tend to eschew productive employment in favor of comfortable government jobs. The Saudi labor problem is further complicated by the limitation of Saudi educational system, which emphasizes the study of religious texts rather than study of the technical skills necessary to help Saudis adjust to the global market and raise their competitiveness in the world. According to SAMBA (Saudi American Bank) with its records of the government, the unemployment rate reached 15.25% in 2001 (SAMBA, 2002).

2.6. Massive Outlays on Defense

Saudi Arabia's economic distortion is also related to the massive Saudi defense budget. Saudi Arabia has an extensive military infrastructure and the nation is by far the highest military spender among the Middle East countries.[2] Since the 1950s, Saudi Arabia has turned to the United States for most of its arms purchases. Since the Gulf conflict, Saudi Arabia government justified the nation's high defense expenditure inevitable because of the dangerous and explosive environment in the region. EIU country report showed that the kingdom has ordered military hardware totaling about $30 billion from United States since 1990 (EIU, 2004).
In consequence, for the most of the 1990s, the Saudi defense sector accounted for about 35% of Saudi overall budgetary expenditures. This did not include expenditures on foreign weapons systems, which were usually camouflaged in Saudi current account. Together the two defense expenditure categories pushed per capita Saudi defense spending to about $2,000-one of the highest defense expenditures in the world (Enav Peter, 92).

2.7. Protection of Domestic Industry

Although Saudi has been trying to promote open economic policies, the task has been very difficult because of the existence of many systems aimed at protecting national goods and industries. The high corporate taxes for foreign partners in Saudi joint venture, the high tariffs on foreign imports that are competitive with goods from the Saudi region, and the strict agency laws which compel foreign companies to work only through local partners are the obstacles that lie on the path to the open economy. Due to these issues, Saudi Arabia's attempts to join WTO since 1993 have ended in total failure.


3. The Process of Economic Globalization of the 1990s

3.1. Meaning of Economic Globalization

As globalization includes multi-dimensional factors such as politics, economy, society, culture and etc., it has various definitions and meanings. Thus, trying to define globalization in a single sentence is a very controversial and sophisticated work. Mr. Han Yong Heuy, an Economics teacher at Korean Minjok Leadership Academy, defined globalization economically as the integration of world markets into a single one. In other words, it means a virtual elimination of national boundaries.
The global economy would promote free movement of goods or services, technology, factors of production such as capital, labor and other resources such as knowledge and information. This would promote more effective production of goods by raising the productivity, the phenomenon which was made possible by the information communication technology or ICT. In terms of economic perspective, the meaning of globalization is largely divided into two categories among the economists. One group defines the globalization as a process of colonization and blames the globalization as fostering inequality, domination and exploitation. On the other hand, most economists define the concept of globalization as a process of improving international division of labor and integrating national economies through trade of goods and services, cross-border corporate investments, financial flows, decrease in the burdens of government sectors through cutting of government subsidies, and the privatization state-owned enterprises (Hong, Sung Min, hopia.net, 2002). Therefore, they accept the globalization as synonymous in meaning with 'liberalization' and focus on the globalization's benefits such as the rise in productivity and growth rate. In order to analyze the economic globalization of Saudi Arabian economy since the 1900s, this paper would adopt the latter point of view adopted by the majority of economists.
The driving idea behind globalization is free-market capitalism. The more we set free the market forces and the more we open our economy to free trade and competition, the economy will grow more efficient and dynamic. Therefore, globalization means the spread of free-market capitalism to other countries in the world. Also, globalization opens, deregulates and privatizes the economy in order to make it more competitive and attractive to various foreign investments. Thus, the economic development strategies in the globalization process could be considered as consisting of three interconnected elements: national market liberalization; integration with global markets; market-supportive legal rules and political institutions.
The first element of globalization strategies is the national market liberalization. During the Cold War period, many developing countries adopted economic development strategies based on the idea that government could control and direct economic activity. But with the end of the Cold War, many of these countries have made efforts to adopt the market economy as an essential part of their economic development strategies. To liberalize the productive behavior of private sectors, economic development strategies have to reduce government involvement or interference in the economy and create space in which private sectors can freely carry out their transactions in the market. Therefore, key tactics in the national market liberalization are privatization of state-owned enterprises and deregulation of economy to cut down the burdens of government interference imposed on productive and capable private enterprises.
The second element of globalization strategies is global openness. The establishment of national market liberalization is reorienting economies to be open to international trade and foreign investment. As mentioned above, globalization blurs traditional distinctions between the national and international economy. In addition, technological advances such as computer and information technologies have permitted the establishment of transnational networks in production, trade, and finance. In this global environment, global openness means an export-oriented economic growth along with attempts to attract and keep foreign investment. As novel technologies are providing companies and people with enlarging opportunities to connect with the rest of the world, global openness will continue to be boosted in the future.
The third element of globalization strategies is the reform of legal and political infrastructure. If the government does not enact the proper legal rules and establish political institutions that would help to sustain effective economic development along with globalization, national market liberalization and global economic openness would not occur and would not be maintained. Therefore, economic development strategies in the era of globalization definitely require a certain kind of favorable environment provided by the legal and political systems. In other words, if the legal rules are in harmony with the objective of facilitating global economic networks, the globalization process would be much sweeter and fruitful.

3.2. Saudi Arabia's Globalization Strategy : Reducing Government Subsidies

Due to continued stagnation since the 1980s, Crown Prince Abdullah, who effectively led the Saudi government from 1995 to King Fahd's death in June 2005, officially announced that the oil boom era of the 1970s had come to an end (Chosun.com, 2000). He adopted globalization strategies led by IMF, World Bank and WTO. The globalization strategies include the reduction of the government sector through a cutback in subsidies, expansion of privatization in order to activate the private sector, labor market reform, and the enlargement of economic opening in order to recover the economic growth. This section will first deal with the first strategy, reduction in government subsidies.
Since 1995, the government has reformed its economic system by reducing subsidies, increasing public charges and fees, discontinuing a free medical system, and raising an electricity charge. The 1995 budget sharply raised rates for electricity and water for both businesses and private consumers in a bid to encourage greater efficiency. A further rise in price for electricity was introduced in 2000, within the framework of preparations to privatize the electricity industry. These increases were short-lived, however, band were rescinded six months later in response to heated public protests on electricity bills when air-conditioning requirements were at their peak.
Saudi's wheat subsidies were initiated in the 1970s when the government decided to spread the financial benefits of oil boom to provinces that do not produce oil (Chosun.com, 1973). According to this policy, Saudi wheat farmers received three times the world market price for their crop even into the early 1990s. And by 1993, Saudi had become the sixth largest wheat producer in the world. Nevertheless, as the government experienced hardship related to difficulties in balancing the budget, subsidies of wheat farmers also had been dramatically cut back since the Gulf War because of the immense cost of war. But these subsidies have been increasing again since 1995 as wheat production has decreased. That is to say, subsidies of the agricultural sector decreased from SR 1.5 billion in 1984 to SR 22 million in 1995, but these have risen back to SR 287 million in 2000 (Kingdom of Saudi Arabia Ministry of Planning, 2002). This recent enlargement of subsidies for agriculture acts as a great barrier for Saudi Arabia in its attempt to join WTO.
Public utilities charges and fees that formed 40~50 percent of revenue of non-oil sector had decreased from SR 24.8 billion in 1997 to SR 20.8 billion in 2000, while government subsidies had increased from SR 4.8 billion in 1997 to SR 5.9 billion in 1999. Along with failure of subsidy cut-back policy, due to the increase of the wage share by expanding pubic sector and growth of rigid expenditure such as enlargement of interest expenditure on debts of the government, attempts to improve the chronic budget deficit also failed to realize. Wage share of the public sector out of total expenditure had grown 46.7% in 1997 to 56.2% in 1999, and the share of interests for debts of the government also increased from 11% in 1997 to 14.6% in 1999 (EIU, 1999). Therefore, the government budget had inevitably revealed deficit since 1995, except for the year 2000 when oil prices sharply mounted up to $27 per barrel (SAMBA, 2002).

3.3. Saudi Arabia's Globalization Strategy : Expanding Privatization

Since 1995, the Saudi government has championed privatization in order to increase opportunities for the private sector and to enhance economic efficiency as well as competitiveness of the national economy. Also privatization would help to rationalize public expenditure and alleviate burdens on the budget. In 2002, twenty sectors were identified for privatization, including telecommunication, electricity, industrial parks, postal services, water, railroad, education, and air transportation (EIU, 2003). The Saudi government has made an effort to privatize the Saudi airlines since 1994, Saudi Port authority since 1997, the telecommunication sector and the Saudi electricity company since 1998, Royal Commission for Jubail and Yanbu that offer electricity and water into these regions in 1999, and Postal Utility and Saudi Railway Organization (SRO) in 2002. As you can see, privatization has been a recurring theme throughout Saudi development plans. However, actual achievements have been relatively minimal so far. Small-size companies such as Saudi Port authority and Royal Commission for Jubail and Yanbu did successfully come under private management (Kingdom of Saudi Arabia Ministry of Planning, 2002). Nevertheless, large scale companies such as Telecommunication companies and Electricity companies had been prepared to become privatized for a long time, but still could not be carried out because of undecided plans for further restructuring, valuation of assets and the preparation of audited accounts. Also, a consortium of banks has been appointed to draft proposals for privatizing the national Saudi Arabian Airlines, but due to market anxiety about other national airlines, this privatization project has delayed as well.
Arguably the most important candidate for future privatization is the Saudi Basic Industries Corporation (SABIC), a petrochemical group in which the government holds a 70% share. But because SABIC subsidiaries have borrowed on a large scale from the corporation and some of them have still a great deal of debts to repay, the plan of privatization has entered into rescheduling arrangements without further progress.

3.4. Saudi Arabia's Globalization Strategy : Labor Market\par Reform, or Saudization

One of the most important economic reforms is the labor market reform. It aims at significantly reducing the number of foreign workers in the kingdom. According to statistics from CDS (Saudi government's Central Department of Statistics), there were approximately five million non-Saudi population and three million of them were part of the labor force and employed. An unemployment rate among non-Saudi workers was 0.83%. According to reliable estimates, this non-Saudi labor force repatriates some $15bn annually (Enav Peter, 98). At the same time, the prevalence of so many skilled foreign workers has done much to erode the local Saudis work ethic. On the other hand with jobs being created for only about one-quarter of the total number of Saudi entrants to the job market every year, the government is redoubling its efforts to curb the number of expatriates.
To solve this foreign worker problem, the Saudi government has introduced the so-called 'Saudization' policies, under which the number of foreign workers in the kingdom is meant to be cut by 60%, to about two million. The Saudi government has carried out the task by stopping the issuance of work visa to foreigners in certain jobs, by increasing vocational training for Saudi nationals, and by tying government loans to Saudi private sector companies to minimum hiring quotas for Saudi nationals.
But under current situation where Saudi employers, who benefit from the significant wage differences between foreigners and Saudis, are strongly against the plan and poor work ethic of local Saudis who tend to escape from productive employment is prevailing, the progress of Saudization is very slow. Experts view that the key to Saudization's success lies on the improvement of the Saudi educational system to cast off its traditional pattern of religious oriented learning and commit itself to inculcating technical skills.

3.5. Saudi Arabia's Globalization Strategy: Stimulating Open Policy

In the meantime, the Saudi government expanded its openness in order to improve the environment characterized by strict trade and investment. In order to introduce free trade, the Saudi government has joined Gulf Cooperation Council (GCC) Customs Union in early 2005 and has lowered customs from 12% to 5% since 2001. Furthermore, on behalf of existing foreign investment law established in 1979, new foreign investment law has been endorsed in 2000.
Saudi government established SAGIA (Saudi Arabian General Investment Authority) with this law. The government has decided to permit 100% foreign ownership in the sectors such as gas, electricity, water, and petro-chemistry and cut the corporation tax of foreign investment from 45% to 30%. And it gave foreign businesses the right to own land and sponsor their own employees. Also, if a company introduces an advanced technology, Saudi would give a financial support, which can lend 50% of total investment at a low interest rate in the long term from SIDF (Saudi Industrial Development Fund).
But Saudi Arabia still imposes a tariff of 20% on imports of foreign goods that are competitive with goods from Saudi regions in order to encourage local industries, and a tariff of 100% on some farm products such as wheat. Saudi bans the import of some goods because religious reasons. Some sectors considered as strategically or religiously significant were closed to foreign investment. Most important of all, the government has retained control over the upstream oil sector. And because of the restrictive agency law, foreign companies are still required to work through Saudi business entities.
Also, even though Saudi people pay 2.5% of a religious tax, zakat, by themselves, foreigners or foreign companies must still pay a very high rate of taxes although the rate has been cut from 45% to 30% since a new foreign investment law was enacted. To solve an unemployment problem, Saudi has tried to carry out a policy hiring Saudis, a policy that requires both Saudi and non Saudi companies to hire Saudis to at least 5% of the total employees. Because Saudis are less productive and receive more wages than non-Saudis, this policy is undermining the competition of foreign companies in Saudi Arabia.
In order to join WTO, Saudi has appeased the government sponsor system and opened the door for member countries of GCC, and made an environment such as the establishing of a new foreign investment law. But because of the barriers such as agricultural subsidies, rigid foreign investment provisions on some business and rigid regulations for intellectual property rights protection, Saudi's attempts to join WTO has been unsuccessful.

3.6. Evaluation of Saudi Economic Globalization

The extent of Saudi economic globalization can be evaluated by looking at whether the government has succeeded in activating the private sector and the openness of the economy to foreign markets. In this section, the globalization of Saudi will be examined by measuring both these level of activation of private sector and openness based on recent statistics and calculations introduced by the Kingdom of Saudi Arabia Ministry of Planning and the World Bank in recent years.

3.6.1. Level of Private Sector's Activity

The level of activation of a private sector can be inspected by comparing the early 1990s (1990~1995) with the late 1990s (1996~2001) since the strategy of globalization has been enacted throughout the last decade of the 20th century. To assess the level of activity of the private sector, the share of GDP of non-oil private sectors, non-oil government sectors, oil-sector along with the average growth rate of investment of non-oil private sectors should be considered altogether. First of all, non-oil private sectors' share of GDP has decreased by 0.5%, from 49.5% during the first half of the 1990s to 49% during the last half. Non-oil government sectors' share of GDP has increased by 0.2%, from 18.7 % to 18.9%, and oil-sector has increased from 31.8% to 32.1%. The average growth rate of investment in non-oil private sectors during the first half of 1990s is 5.5% and the second half 4.2%. According to these data, although the Saudi government has attempted to promote private sectors throughout the 1990s, the progress has been very weak and minimal.

3.6.2. Level of Openness

The indicators measuring the level of openness are the ones that denotes the degree of integration with the global economy, such as trade ratio (trade in goods as a share of nominal GDP), trade in goods as a share of goods GDP, change in trade as a share of GDP, Growth in real trade less growth in real GDP, Gross private capital flows, Gross foreign direct investment. The data to measure them comes from statistic data of World Bank.
The trade in goods is the first basic link with the rest of the world, and it is the obvious manifestation of global economic connections promoted and supported by capitalism. Therefore, trade ratio calculated as a ratio of trade in goods (the sum of merchandise exports and imports) to nominal GDP is the most meaningful and significant indicator for the extent of world economy integration. In case of Saudi Arabia, it is shown that it has reduced from 64% in 1990 to 53.3% in 2001, which means that the integration with world economy weakened despite the globalization policies.
The difference between growth rate of real goods and services and real GDP growth rate is an indicator to demonstrate the trade liberalization, the mitigation of barrier for foreign investment, and the labor shifting in order to gain competitive advantage in the labor-intensive manufacturing and service sectors. Based on the results from 1990 to 2001, the average growth rate of real goods and services of 1990-1995 was 3.9%, slightly larger than the real GDP growth rate 3.8% by 0.1%. On the contrary, the average growth rate of the services and goods of 1996-2001 was 4.3%, whereas real GDP growth rate at that time was 2.4%. Therefore, these differences in growth rates demonstrate that the trade liberalization, the mitigation of barrier for foreign investment, and labor shifting have improved to some extent, but otherwise stayed at a low level as before.
The change in trade as a share of GDP which has been calculated every decade shows how effectively the trade policy has operated. It can be compared with gross GDP versus the share of import and export in the 1980s and 1990s. Saudi has decreased from 65.5% in the 1980s to 54.5% in the 1990s. This indicator shows that Saudi has not effectively coped with globalization in terms of its trade policy.
Economic openness can also be measured by considering indicators of capital flow, such as gross private capital flows and gross foreign direct investment. Gross private capital flow is the value calculated by extracting the sum of assets and debts of the government and monetary authorities from the sum of investment inflows and outflows such as portfolio investment, direct investment, and other forms of investment. It is calculated as a ratio to GDP. As for Saudi, gross private capital flows have decreased from 9.8% in 1990 to 9.3% in 2001. And gross foreign direct investment is the sum of the absolute value of inflows and outflows of foreign direct investment. It includes equity capital, the reinvestment of income, long-term and short-term capital also calculated as the ratio of GDP. World Band statistics show that Saudi's gross foreign investment has not changed from 0.3% of 1990 to 0.3% of 2001.
As various indicators of the level of private sectors activity and economic openness shows, the progress of globalization has not happened despite government efforts and policies. It appears that most of globalization strategies since the middle of 1990s have failed.


4. Saudi Economic Trends in the 2000s and Prospects of Saudi Economy

Thanks to a rise in oil prices in 2000, Saudi Arabia enjoyed the first budget surplus in 19 years and achieved 4.9% GDP growth that year. High oil prices seemed to continue into the next year when 9/11 attack occurred to shock the world. Since that day, the contraction of the world economy caused oil prices to drop again, thus GDP growth that year decreased to low 1.2%, and Saudi Arabia had another year of budget deficit in just one year of time.
Since March 2003 when the Iraq war began, Saudi Arabia has regained a better GDP growth of 6.4% in that year despite ferociously growing political troubles in the Middle East. However, that increase resulted only from the rise in oil prices after the war and does not denote that Saudi economy has improved to stand on its own regardless of oil prices. Reduction in direct foreign investment, chronic budget deficit, high dependence on oil, heavy interests on enormous public debts, low investment on equipment are few of the problems that are still thwarting the Saudi economy.
Saudi Arabia is the foremost oil producing nation as well as the nation whose economy is dominated and swayed by unsteady oil prices. Another serious problem for Saudi Arabia is that although they have experienced a booming population growth over the last thirty years, manufacturing industries have not developed to accommodate that growth, causing reduction in per Capita GDP. Saudi GDP now is less that one-third of the GDP twenty years ago. However despite all these problems to be solved by the Saudi government, oil prices are currently soaring to more than $60 a barrel (Chosun.com, 2005). Relieved Saudi government should use this chance to ameliorate the economic situations and prove to be a solid nation in the future. A recent report showed that SAGIA (Saudi General Investment Agency) declared to invest seven hundred billion dollars to the industrial project for the next twenty years (Chosun.com, 2004). Main investment will be made on electricity, along with water, refined oil, and other key industries. Also, Saudi Arabia is planning to promote many ambitious policies in order to attract foreign investments that will contribute to higher GDP growth rate and reduce the nation's dependence on oil (Chosun.com, 2005).
Saudi Arabia's basic economic policies in the current year are as follows. First of all, the economy is in pursuit of a stable long-run oil policy that would definitely stabilize the economy. Stable economic growth is the aim of the second policy. As they have learnt a lesson from the experience of negative growth from 1993 to 1995, the budgets would not be spent carelessly on massive public construction projects. Third, the Saudi government is aiming to diversify the economic structure to reduce the dominating share of GDP accounted for oil-related industries. To promote this diversity, its fourth policy is to activate the private sector through the seventh 5-year economic development plan (2000~2005). Fifth policy is to continue the Saudization that started since 1988. To provide jobs for one hundred thousand new entrants to the job market every year, the Saudi government would try to reduce and limit the number of foreign laborers in the country.

5. General Overview of Economic Exchange between Saudi Arabia and Korea until Today

Since the establishment of diplomatic relationship between the two nations in 1962, the first genuine economic interactions occurred in the 1970s and 1980s through the so-called construction boom in the Middle East. As the third and fourth economic development plans under King Khalid attracted many foreigners to Saudi Arabia, quite a number of Koreans were among them to seek jobs and wealth in the promising land of the Middle East. Saudi Arabia back then had no solid basic infrastructure and technology to carry out these construction projects, thus had to rely on foreign nations to do it for them. And Korean construction corporations advanced into the country to grab this opportunity in order boost the Korean economy (Chosun.com, 1987). Out of ten original construction corporations that advanced into the Saudi market, only four survived until today : Daewoo Corp. Riyadh Branch since 1975, Daelim Saudi Arabia Construction Corp. since 1773, and LG Engineering & Construction Corp. since 1881. As Hyundai Construction Co. Riyadh Branch joined them since 1995, there are currently four construction corporations still actively conducting construction projects and raising profits.
Thanks to this construction boom in the Middle East, Korean corporations were able to reap great oil dollars from Saudi Arabia. Some economic experts argue that if the boom had not happened, Korea then would have suffered a terrible economic slowdown comparable to IMF crisis of the late 1990s (Chosun.com, 2005). Approximately 150,000 Korean workers had flied to Saudi Arabia during the two decades of construction boom to assist the building of the infrastructure.
However, as Saudi Arabia equipped itself with a solid infrastructure thanks to Korean construction corporations, they have changed their demand to industrial plants construction, which requires a much higher level of technology. Thus, the construction profits made by Korean construction companies have diminished because of heavy competition from abroad. But, Koreans have sought other ways to reap benefits. Korea's export items to Saudi Arabia gradually increased in number and today, exports mainly consist of cars, textiles, electronic products such as mobile phones and air conditioners, steel, and chemical goods. Among them, textiles and fibers are the primary export items to Saudi Arabia. Textiles are used to make thobes for men and abayas, a traditional dress that covers the entire body, for women; fibers are indispensable in producing blankets for prayers on their pilgrimage to Mecca (Chosun.com, 2003).

Pic 1: Thobe and Abaya mostly made by Korean export items, textiles and fibers
(Source: Mina Traveling agency, 2003)

On the other hand, Koreans import mainly petroleum (79% of all imports from Saudi Arabia) from Saudi Arabia. Due to huge amount of petroleum Korea consumes every year, Korea is currently the third largest importing country after United States and Japan.

Table 3 : Saudi Arabia's export to countries (unit: 1 million US dollars)
YEAR 1999 2000 2001 2002 2003
Country Export Export Export Export Export
U.S. 9916 15689 12385 14270 17436
Japan 7599 12286 10426 10393 13153
Korea 5448 8339 6566 6883 8484
India 2180 3419 3290 3931 5548
France 2180 3419 3290 3931 5548
Italy 1180 1859 1766 1799 2364
Britain 436 859 898 731 -
China 627 1501 2175 2885 4098
(Source : Saudi Arabian Monetary Authority, 2003)


Thus, for Saudi Arabia, Korea is also one of the most important trading partners for them. But other than the exports of oil, no Saudi business has been able to take a firm root and make profits on the Korean soil. Thus, in the next section of the paper, I will focus on Korean businesses in Saudi Arabia and analyze how five Korean corporations achieved great successes in Saudi Arabia through local production.
Also, some interesting anecdotes related to the economic exchange could be found while going through decades of newspapers. Some export items from Korea have been denied access because in the past, some Korean companies failed to take into account distinct characteristics of the Islamic world. In 1883, news article from Chosun.com reported that Korean noodle company's efforts to export Korean noodles to Saudi Arabia for the first time was rejected because pork was included in the list of ingredients. Also, Korean liquor companies failed to advance into the Saudi market because the government strictly bans the import of alcoholic drinks due to the Sharia, Islamic Law.


6. Korean Goods in Saudi Arabia

6.1. Samsung Mobile Phones

Among the current nineteen local producing corporations, Samsung Electronics Co. has most successfully built a trustful and powerful brand image of Korean product: Samsung mobile phone. After they have won the confidence of Saudi consumers on Samsung phones, the competition with Japan and other global mobile companies proved to be Samsung's victory. Also, since 1998, Samsung has produced mobile phones equipped with voice-dialing function, taking into account that Saudi Arabia is one of the few nations that do not yet prohibit telephoning while driving the car (Chosun.com, 1998). Thanks to this new technology that no other corporations were able to produce, Samsung Electronics Co. has consolidated its place on the top.
Also, considerable efforts and money spent for effective advertisements played its role (Chosun.com, 1998). It showed that in the remote market in the Middle East region, the first task is to spread and convince the natives of the quality of Korean products. For example, Samsung has made an ad showing a young girl hopelessly lost in the desert. However, she had a Samsung mobile phone with her and in the midst of the vast desert, she was able to get rescued by telephoning her parents.

6.2. Satellite Broadcast Receivers

Another successful locally produced good is a satellite broadcast receiver. This success also could be achieved because the corporation had accurately grasped and sensitively paid attention to changes in the inclinations and needs of the Saudi people and used that research to cut into the market promptly. A satellite receiver was originally a prohibited product in Saudi Arabia because the government viewed the item as contradictory to Islamic customs. However, Saudis were greatly attracted by the product, which allowed them to connect with the entire world just by sitting in the living room. In 1991, the start of the Gulf war brought satellite receivers secretly into Saudi market (Chosun.com, 1991). Koreans sensed this change and foreseeing that the government would lift the ban on the item in near future, they started selling receivers to Saudis at low prices in order to first to familiarize Saudi consumers with Korean products. SK networks since 1982 and Taihan Electric Wire Co. since 1984 are the local corporations still producing Korean satellite receivers which now dominate approximately 80% of all sales in Saudi Arabia (Chosun.com, 2001). However, in order to maintain their substantial market share, experts argue that Korean corporations must keep renovating and improving the designs and capacities of the products to suit the needs of Saudi consumers.

6.3. Air Conditioners

LG Electronics Corporation has also been very successful in producing the electronic device indispensable to Saudis: air conditioners. Since 1883, they have advanced into the Saudi market that is deemed as the inevitable test place for air conditioner companies from all over the world. Through careful and thorough market surveys and researches, LG Electronics has seized the desires of Saudi consumers and incorporated those wanted features to original air conditioners being sold in Korea. They have took into account the Saudi climate which is steaming hot almost a year long and the characteristic of the Saudi society that is rather a closed one where women are not allowed to go out whenever they wish. Thus, they put many useful functions to the air conditioner that will give Saudis fresh and fragrant air that will be good for the health of people who will turn on the air conditioners almost whole day (Chosun.com, 2002).
Advertisements also helped them to raise their sales. They have used lots of money into extensive ads of all kinds from newspapers to standing billboards on the highway to attract Saudis to buy their products. Thanks to these efforts, LG Electronics are currently dominating the air conditioner market by selling approximately 30% of the total sales (Chosun.com, 2005). However, a noticeable difference in their success is that they maintained a high price tactic unlike other Korean corporations selling their products at cheap prices. This tactic along with high quality of their products convinced the Saudi consumers and attracted them by large numbers.

6.4. LG Mobile Phones

LG mobile phone is the product that is raising the most sales these days. The Koreans dispatched from LG Electronics have researched and pondered upon the features to add to locally produced mobile phones and they have invented a special phone just for Arabs. They have added an alarm function that notifies Muslims of the praying time along with a function that shows Qibla, the direction in which which Muslims pray six times a day (Chosun.com, 2002). These features have won the hearts of devout Muslims in the nation where Mecca and Medina are located. Saudis who pray anywhere no matter what but had difficulty in finding the direction toward Mecca in places such as airplanes and deserts, LG mobile phones have become an indispensable item they must buy. Due to this original and novel idea of combining the Arab custom of praying with the portability of the mobile phone, LG is speedily catching up on the percentage sales of Samsung and Nokia phones that have dominated the market for a long time (Chosun.com, 2002).
"We are confident. We will beat them in a few years", says a LG Electronics manager in Jeddah office to a reporter from Seoul (Chosun.com, 2003). As LG is preparing large-scale ads to raise their sales, dispatched workers are saying that they are feeling a difference in Saudi Arabia. Saudis have come to view Koreans differently with respect for selling such high quality electronic devices in the markets. If this stream of large sales maintains its pace, experts anticipate that Koreans will reap approximately five hundred million dollars just from selling mobile phones (Chosun.com, 2004).

6.5. Hyundai Motors Cars

Hyundai Motors is currently the third largest car selling company after Toyota and GM motors in Saudi Arabia (Chosun.com, 2005). However, the prospects for the future seem excellent. Hyundai Motors will be building a local factory and branch office this year and dispatch several able Korean managers to oversee the process and start full-scale projects to boost up their sales. But prior to Hyundai's decision to locally produce and sell the cars, Hyundai cars have been popular all along in Saudi Arabia. "It is very common to see Korean cars from Hyundai and Daewoo here", says a Korean student studying in Jeddah (Chosun.com, 2005). Comparatively low price and high quality of imported Korean cars have been attracting Saudi consumers even though no substantial efforts were made to raise the sales. Now that Hyundai Motors have decided to advance into the market for real, there seems to be a bright future ahead.
With these high car sales, three tire producing corporations have also made their mark in the Saudi market: SSangyong corporation since 1983, Kumho Tire corporation since 1981, and Hankook Tire corporation since 1986 (Chosun.com, 2004). All these three corporations have made a branch office in the city of Jeddah and have been raising consistent profits along with car companies.


7. Suggestions for More and Better Successes in the Future

For better and expanded Korean exports and sales in Saudi Arabia, some improvements will have to be made. Currently, there is no genuine or reliable Middle East expert in Korea. This is partly because of lack of support from the government and corporations. The government should invest in establishing an advanced research center to systemically conduct researches and analyze the Saudi market. Then, the process of finding out a breakthrough for Korean products into the Saudi market will be very much facilitated.
Secondly, Korean corporations must equip their products with better and improved technology to suit the needs of Saudi consumers and attract them among the heavy competition with other global corporations. This suggestion stems the lesson learned from the 1970s construction boom in the Middle East. Even though Korean construction companies have achieved huge profits during that era, Koreans have failed to maintain the level of sales because the development and improvement of construction technology was comparatively slow compared to other companies that equipped themselves with competitive technology to snatch our profits away.
Third, the Koreans must try to alter many Saudi Arabians' unfavorable opinions about them and forge a closer relationship with the nation. The image of Koreans to Saudis is not very pleasant or agreeable because Saudis tend to think of Koreans as Asians who only seek profit from their land. They believe that Koreans are only after money and have no other interests in diplomatic or cultural exchanges. These negative views against Koreans would serve as a great obstacle to future successes of Korean businesses in Saudi Arabia. Thus, the government and nongovernmental organizations should promote more intimate and friendly relationship with the Saudis by organizing various means of cultural exchange. Thanks the so-called Korean wave presently spread throughout entire Asia, many popular Korean actors and singers are winning favorable images of Koreans in countries like Thailand, Vietnam, Philippines, and Taiwan. If we could export Korean movies or dramas to the Middle East and spread the Korean wave farther into the region, the Arabs would come to have more intimate and pleasant opinions about Koreans, thus favor and consume Korean products instead of others.
Also, Koreans should correct their distorted attitudes or views against Saudi Arabia. Because of the 9/11 attack and Kim Sun Il murder in June 2003, many Koreans have come to view all Arabs, specially Saudi Arabians, as unmerciful terrorists who should not be dealt with. However, only small number of Muslims in the Arab world approve of the terrorist acts committed by groups such as Al-Qaeda because their actions do not conform to Islamic Law and Islam teachings. Unless Koreans discard these negative prejudices, mutual economically beneficial interactions would be very difficult to expand in the future.


III. Conclusion

Saudi Arabia is currently facing difficult tasks of globalization. If Saudi Arabia tries to continue the globalization strategies mentioned earlier in the paper quickly and effectively using all the resources available, it seems very much possible that the nation will escape from a vicious circle of low growth in near future. However, some experts anticipate that the thorough globalization would still require about two more decades since Saudi Arabia is one of the most conservative Islamic countries in the world. Along with this process of globalization, economic exchange between Korea and Saudi Arabia will be going through a new phase. Until now, main economic exchanges have been from Korea to Saudi Arabia, except for vast amount of oil imported from Saudi Arabia to Korea. The lessons and experiences gained from the 1970s construction boom and comparatively recent successes of Korean electronic corporations should be very valuable data for future successes of Korean businesses in Saudi Arabia.
Saudi Arabia is currently the largest oil producing nation and there still exists vast amount of oil buried under the Saudi Arabian soil. Experts anticipate that oil will continue to be produced at least for another 83 years. Thus, the effective economic interactions based on favorable diplomatic relationship will continue to be very crucial for the future of both economies.


References

Newspaper articles, reports
Chosun.com (Internet news site) from CHOSUN ILBO
Despite the recovery of oil prices in 1999, real GDP growth rate even contracted by 0.8% (Chosun.com, 1999). p.10
Also the Saudi Arabian government nationalized the biggest oil company, Saudi Aramco... (Chosun.com, 1975) p.11
In 2002, the ratio of public domestic debt to GDP rose to 97% because of a higher budget deficit. (Chosun.com, 2002) p.13
the Saudi government established SABIC leading Saudi petro-chemical industry and held 70% of the industry's share in 1976 (Chosun.com, 1978). p.13
the twenty-seven public organizations, including Saudi Arabian Airlines and Pension Fund, were allocated the possession of about 18%, or SR 41.2 billion among the overall Saudi government budget of SR 228.1 billion back in 2001 (Chosun.com, 2001) p. 14
On the other hand, labor productivity of the public sector measured by output/labor ratio had decreased to one half of 1983 (Chosun.com, 2002). p. 16
Crown Prince Abdullah, who effectively led the Saudi government since 1995 until 2005 when King Fahd died, officially announced that the oil boom era of the 1970s had come to an end (Chosun.com, 2000). p.21
Saudi's wheat subsidies were initiated in the 1970s when the government decided to spread the financial benefits of oil boom to provinces that do not produce oil (Chosun.com, 1973). p.22
However despite all these problems to be solved by the Saudi government, oil prices are currently soaring to more than $60 a barrel (Chosun.com, 2005) p. 31
A recent report showed that SAGIA (Saudi General Investment Agency) declared to invest seven hundred billion dollars to the industrial project for the next twenty years (Chosun.com, 2004) p.31
Also, Saudi Arabia is planning to promote many ambitious policies in order to attract foreign investments that will contribute to higher GDP growth rate and\par reduce the nation's dependence on oil (Chosun.com, 2005). p.32
Korean construction corporations advanced into the country to use this opportunity to boost the Korean economy (Chosun.com, 1983). p. 33
Daewoo Corp. Riyadh Branch since 1975, Daelim Saudi Arabia Construction Corp. since 1773, and LG\par Engineering & Construction Corp. since 1881. (Chosun.com, 2003) p. 33
As Hyundai Construction Co. Riyadh Branch joined them since 1995... (Chosun.com, 2003) p.33
Korea then would have suffered a terrible economic slowdown comparable to IMF crisis of the late 1990s (Chosun.com, 2005). p.34
fibers are indispensable in producing blankets for prayers on their pilgrimage to Mecca (Chosun.com, 2003). p.34
Korean noodle company's efforts to export Korean noodles to Saudi Arabia was rejected because pork was included in the list of ingredients (Chosun.com, 1883) p.35
Saudi Arabia is one of the few nations that do not yet prohibit telephoning while driving the car (Chosun.com, 1998). p.36
considerable efforts and money spent for effective advertisements played its role (Chosun.com, 1998). p.36
In 1991, the start of the Gulf war also brought satellite receivers secretly into Saudi market (Chosun.com, 1991). p.37
SK networks since 1982 and Taihan Electric Wire Co. since 1984 are the local corporations producing Korean satellite receivers which now dominate approximately 80% of all sales in Saudi Arabia (Chosun.com, 2001). p.37
they put many useful functions to the air conditioner that will give Saudis a fresh and fragrant air with various functions that will be good for the health of people who will turn on the air conditioners almost whole day (Chosun.com, 2002). p.38
Thanks to these efforts, LG Electronics are currently dominating the air conditioner market by selling approximately 30% of total sales (Chosun.com, 2005). p.38
They have added an alarm function that notifies Muslims of the praying time and a function that shows Qibla, the direction to which Muslims pray six times a day (Chosun.com, 2002). p.38
LG is speedily catching up with the percentage sales of Samsung and Nokia phones that have dominated the market for a long time (Chosun.com, 2002). p.39
"We are confident. We will beat them in a few years," says a LG Electronics manager in Jeddah office to a reporter from Seoul (Chosun.com, 2003). p.39
experts anticipate that Koreans will reap approximately five hundred million dollars just from selling mobile phones (Chosun.com, 2004). p.39
Hyundai Motors is currently the third largest car selling company after Toyota and GM motors (Chosun.com, 2005). p.40
"It is very common to see Korean cars from Hyundai and Daewoo here,"says a Korean student studying in Jeddah (Chosun.com, 2005). p.40
three tire producing corporations have made their mark in the Saudi market: SSangyong corporation since 1983, Kumho Tire corporation since 1981, and Hankook Tire corporation since 1986 (Chosun.com, 2004). p.40

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Endnotes
1 According to data of SAMBA (Saudi American Bank), compensation for Saudis is on average 3 times that of non-Saudis with the same level of education. The average annual compensation for Saudis is SR 84,516 ($22,538), while the average annual compensation for non-Saudis is SR 28,248 ($7,532).
2 Saudi Arabia military forces consist of the armed forces commanded by the minister of defense and the National Guard commanded by the Crown Prince Abdullah. The total active armed forces were estimated in late 2003 to number 201,500 (EIU, Country Profile: Saudi Arabia, 2004).