Title: Dr. Nahed Taher
1Gulf SOL 10-12th May, Jeddah
Managing Tensions of Wealth Creation In the
Kingdom
- Dr. Nahed Taher
- Senior Economist
- n.taher_at_alahli.com
2Three Themes
- Better Economic Strategies
- More Skilled Labor
- A Knowledge-Based Economy
3Diversifying Economic Base
- From Debt-Led to Export-Led Growth
4Saudi Economic Diversification Strategy lies in
tatters..
The Productive Sectors Need to Grow by at Least
15 in the Next 2 Decades
Annual average real GDP (1995- 2002)
Based on the listed companies profits of the
underlying sector in the Saudi stock market
Electricity companys profits are only in
2002-2003, as it was a loosing sector before.
5High Correlation Between Manufacturing Real
Estate Growth..
6The Current Oil Boom is Different!!
Consumer Claims
Government Claims
'OIL-Boom
7The Purchasing Power of Income declined
Significantly in the Last 2 Decades.
1975100
Source SAMA Reports
8We Did Not Create Our Own Strategy
9Our Man-made Brainpower Exports Are Very
Limited.
Exports/ pop Growth (1990-2004)
Source IFS
10Despite The Oil Boom, Capacity Absorption Sagged
in the Saudi Economy.
Source SAMA reports, NCB Estimation
11Saudis Have Very High Consumption Patterns
Source SAMA, NCB Economic Department
12Recent Rise in Savings Ratio Was Mainly Driven
by High oil Prices
Brent crude
13Labor Market Imbalances
- How much Intellectual Capital Do We Have?
14Kingdom University Graduates Are Mainly in
Non-Scientific Majors
Source Ministry of Higher Education
15Job Creation NOT Substitution is the Solution
Demand-Supply Gaps by Occupation avg 2001- 2003
Source SAMA, Ministry of Higher Education reports
16University Graduates Are Continuing to Grow in
the Unneeded Professions.
1999-2003 Growth
17Science Engineering Graduates Are Way Low
Per 1000 Population Aged 20-34
Source European Commission Science and
Technology Report 2003, authors estimates
18The Labor Force is Poorly skilled.
- The majority of the labor force in Saudi Arabia
is unskilled due to lower level of education - The economic structure between oil (capital
intensive) trade (labor intensive /low skill)
needs to be modernized diversified - Its essential to Restructure education towards
producing high standards labor force in technical
scientific fields.
19Productivity Levels Are Relatively Low.
Indexed to U.S. 100 (2002)
Source World Development Indicators Central
Department of Statistics McKinsey
20But, Productivity Has Been Rising in Productive
Sectors.
Average Labor Productivity Growth 11.5 Annually
21Productivity NOT Population Growth is the
Challenge for Job Creation
- More than 2.6 million jobs need to be created for
Saudis
- Increase due to population growth
- Increase due to higher productivity
- To decrease unemployment to 5
Assuming Saudi male workforce participation
goes from 65 to 80, female participation goes
from 11 to 25 Source MOP Author estimates
22No Room For Entrepreneurs in Our Current
Situation.. We Need Educated Brains!!!
- No of insured companies in GOSI (2002)
23From Competition To Collaboration
Building Knowledge-Based Economy
24Quality of life Index Reflects Under-utilization
of Our Capital
Source EIU
25Doing Business Environment is not friendly For
Entrepreneurs or SMEs.
Source World Bank
26Collaboration Is Essential To Have A Suitable
Ranking For The Kingdom.
Growth Competitiveness Index
Source IMD
27The Saudi Economy is Not in the 21st century
Structure of Managing Knowledge
60s-70s
21st Century
80s-90s
Information
Innovation
Data
Agriculture
Manufacturing
Technology
Competition
Cooperation
Collaboration
Dictators
Managers
Leaders
28AS LEADERS, WOMEN RULE New Studies find that
female managers outshine their male counterparts
in almost every measure, specially in
Transformational Leadership
Womens Leaders Are Crucial to Economic
Development and Job Creation
Title, Special Report, BusinessWeek, 11.20.00
29Further Key Points To Build Wealth
- Creating Wealth requires balancing between
- Chaos vs. Order (entrepreneurs vs. leaders)
- Individual vs. Community
- Present vs. Future
- Old Knowledge Experience have much less value
in the rapidly changing business environment. - Manage Measure Intellectual capital (Managing
Change or Changing Management) - The New Career concept Protean and Boundary-less
(Not moving up the ladder) - Reward by merit.. Not by relationships
- Never hire AMBITIOUS people with LOW MORALS
- Enhance Ethical Corporate Culture to Enable
Executing Change. - Think Globally.. Act Locally (FIND A SAUDI
SOLUTION)
30The Issue There is Significant Hidden Value in
our Beloved Kingdom Institutions...
31Change and survival of the fittest
It is not the strongest of the species that
survives, nor the most intelligent, but the one
most responsive to change.
Charles Darwin
32WE MUST CHANGE!!