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نحن لا نرسل البريد العشوائي! اقرأ سياسة الخصوصية الخاصة بنا لمزيد من المعلومات.

Summary of the episode: Forty years of working in the Saudi economy | Socrates Podcast

This conversation delves into complex economic and social issues in the Saudi and global context, through the comments of the program’s guest, His Excellency Dr. Mohammed bin Suleiman Al-Jasser, who provided keen insights into the economic transformations that the Kingdom has witnessed. The discussion revolves around the role of the International Monetary Fund in providing solutions to financial crises after they occur and the necessity of preempting crises rather than merely implementing painful measures after they happen. The impact of these policies on economic projects and employment is addressed, as Al-Jasser points out that austerity can harm communities that depend on these projects.

The program also discusses the history of economic development in the Kingdom, starting from the scholarship program in the 1970s, and the changes that occurred in the Saudi economy, including the separation of gas from oil and the development of the petrochemical sector. Al-Jasser also touches on his personal and professional journey, and how education and the stages he went through in life significantly influenced his economic thought and vision.

The importance of dialogue is highlighted in affirming that the Kingdom represents one of the key players in the global economy, and the impact of its economic policies on global stability and growth. Thus, the program not only highlights a personal experience but also reflects the historical and economic transformations that the Kingdom has experienced over the decades.

Rejection of the International Monetary Fund and Painful Economic Solutions

The relationship between countries and the International Monetary Fund is a contentious topic, as many people feel dissatisfaction towards the Fund, which always comes after crises occur, making the solutions it proposes often painful. The Fund typically requires countries to cut public spending, leading to the freezing of projects and halting of employment, adversely affecting communities. This policy contradicts the needs of people who depend on these projects and jobs, contributing to a general sense of rejection towards the Fund. Additionally, there is a common belief among some that price reduction can solve all economic problems, a belief not supported by a deep understanding of the economic reality. The significance of the Kingdom of Saudi Arabia as a major supporter of the global economy was also emphasized, and how its economic policies can negatively or positively affect the global economy as a whole.

History of Economic Transformation in Saudi Arabia

The experience of economic transformation in Saudi Arabia is one of the unique experiences in the region, as the Kingdom has witnessed many stages of development since the beginning of the scholarship program in the 1970s. This program contributed to building a strong scientific and technological base by sending students to study abroad. Subsequently, the Saudi economy underwent significant transformations, starting with the separation of gas from oil, culminating in the establishment of new sectors such as petrochemicals. During this time, the Saudi Arabian Monetary Authority played an important role in managing economic crises, especially during periods of financial deficit. Then came the economic boom phase, which was accompanied by effective management of surpluses, leading up to the global financial crisis in 2008. This long history of economic transformations reflects the Kingdom’s ability to adapt to global changes.

Islamic Development Bank and Its Global Impact

The Islamic Development Bank was established in the 1970s to be a financial institution concerned with economic development in the Islamic world. Over 50 years, the bank has provided more than $180 billion for development projects that have contributed to improving the lives of millions. The bank’s role revolves around providing support to member countries by financing development projects aimed at improving infrastructure, education, and healthcare. The bank’s projects have contributed to creating job opportunities and enhancing economic growth in many countries. Additionally, the Islamic Bank collaborates with several international organizations to implement joint projects aimed at achieving sustainable development. These activities illustrate how financial institutions can play a vital role in promoting social and economic development.

Stations

Academic and Personal Experiences

There are various educational experiences individuals go through, where some important educational milestones are discussed and how they have influenced personality development. By talking about memories associated with Al-Faisaliyah School, we can see how this school served as a launchpad for modern education in the Kingdom. Many scientists and prominent figures graduated from it, reflecting the role of education in shaping the future of individuals and societies. The story then transitions to the university stage, where the guest discusses his experience studying abroad and how that experience contributed to his academic and personal skill development. Learning in different environments and cultural diversity opens up thinking horizons and enhances the ability to adapt to new challenges. Experiences of travel and studying abroad contribute to improving cultural and social understanding, which enhances the ability to communicate and interact with others more effectively.

Transitioning from Engineering to Economics

The guest discusses his academic journey and how he transitioned from studying engineering to studying economics. This transition represents an interesting topic, as it reflects how individuals’ interests can change based on their new experiences. After taking a course in economics during his engineering studies, he discovered his passion for economics as an academic field. This moment was crucial in his life, as he decided to pursue a deeper study of economics, which ultimately led him to complete his academic journey in this field. The conversation addresses how studying economics contributed to understanding the economic dimensions of growth and development, and how the financial sector can impact the economy as a whole. This dynamic between different academic disciplines illustrates the importance of interdisciplinary education in shaping a comprehensive vision for contributing to economic development.

Economic Development in the Kingdom of Saudi Arabia

The Kingdom of Saudi Arabia began its journey in modern economic development in the 1970s, as the government started to establish various development funds. The goal of these funds was to enhance economic growth, develop infrastructure, and stimulate the private sector. For example, the Public Investment Fund was established and played a vital role in supporting major projects, especially in the petrochemical sector. Through data analysis and time series, it was evident that the increasing contributions of these funds were directly linked to the growth of the Saudi economy. The results were astounding; major projects in the country, such as refineries and petrochemicals, increased, contributing to the enhancement of industry and employment in the Kingdom.

The Role of the Financial Sector in Economic Development

The financial sector is considered one of the essential components of any economy, as it plays an important role in facilitating investments and providing the necessary financing. The Saudi financial sector has shown remarkable resilience in the face of global financial crises, such as the 2008 crisis. Financial institutions in the Kingdom were not significantly affected by that crisis, as banks maintained their financial stability. This success reflects the importance of having good oversight on the financial sector to ensure its sustainability and ability to deal with crises. This oversight helps avoid economic problems and enhances trust among investors.

The Impact of Development Funds on the Saudi Economy

The Kingdom of Saudi Arabia is characterized by the presence of a group of development funds, which play an important role in stimulating the economy. Among these funds are the Housing Fund and the Industrial Fund, in addition to other funds. During the economic boom of the 1970s, these funds were strengthened, contributing to industrial and infrastructure development. Currently, we are also witnessing the emergence of new funds such as the Tourism Fund and the Infrastructure Fund, reflecting the growing interest in social and economic aspects. Through these funds, sustainable development can be achieved and innovation stimulated across various sectors.

Importance

Fiscal Balance and Economic Reforms

With increasing financial pressures on the budget, the need for fiscal balance has become an urgent necessity. This requires the government to make difficult decisions regarding spending and revenues. Balancing revenues and expenditures is vital for maintaining economic stability. For example, during periods of recession, the government must be prepared to inject more funds into the economy to ensure the continuity of growth. These strategies are part of the objectives of Vision 2030, which aims to diversify the economy and reduce dependence on oil. Financial reforms play a crucial role in creating a conducive environment for investment and stimulating economic growth.

Challenges Facing the Saudi Economy

Despite the successes the Kingdom has achieved in economic development, there are significant challenges that must be faced. Among the most prominent of these challenges are fluctuations in oil prices and their impact on the public budget. Global economic volatility also directly affects the local economy. Therefore, it is essential for the Kingdom to work on enhancing the competitiveness of the economy through innovation and technology. Other challenges include the need to develop the labor market and increase the participation rate of women in the workforce, reflecting the importance of social and economic diversity.

International Funds and Their Role in the Global Economy

International funds, such as the International Monetary Fund and the World Bank, form a fundamental part of the global financial system. These institutions were established after World War II to support countries in rebuilding their economies. The International Monetary Fund provides financial assistance to countries facing economic difficulties, but it often faces criticism due to the nature of the conditions imposed on countries. For example, the financial reforms proposed by the fund often require cuts in social spending, leading to negative impacts on the most vulnerable groups. Nonetheless, these institutions remain essential for achieving global financial stability and supporting development in developing countries.

Vision 2030 and Innovation in the Economy

Vision 2030 seeks to transform the Saudi economy from reliance on oil to a diverse and sustainable economy. This vision includes many initiatives aimed at enhancing innovation and developing non-oil sectors. By promoting education and vocational training, the Kingdom can contribute to creating a new generation of highly skilled workers. The vision also encourages investment in technology and research and development, which enhances the competitiveness of the Saudi economy. Thus, Vision 2030 represents an important step towards achieving sustainable development and improving the standard of living for citizens.

The Economy’s Ability to Absorb Shocks

The economy’s ability to absorb shocks is one of the most important factors determining its stability and success. Over the past decades, many economies have faced severe economic shocks, including the sharp decline in oil prices and global financial crises. In these contexts, the importance of having proactive plans and effective hedges becomes clear. Inability to deal with such shocks can lead to catastrophic outcomes, as seen in certain periods of economic history. An economy that heavily relies on a single sector, like oil, becomes more susceptible to sharp declines in revenues, highlighting the necessity for economic diversification. For example, when oil prices fell in the 1980s, many oil-producing countries faced significant challenges, prompting them to work on structural reforms to enhance economic efficiency.

Economic Challenges Throughout History

The Saudi economy, for example, has gone through many difficult periods, including the late 1970s and early 1980s, when oil revenues were high, but as prices retreated, there was a significant budget deficit. When the economy faces a sharp decline in revenues, it becomes necessary to implement austerity policies such as reducing allowances and halting major projects. During these times, the society experienced the desire to “tighten the belt” as a means to control the deficit. Despite the difficulties, these challenges were essential in prompting thinking about how to improve national resource management and enhance the economy.

Importance

Economic Diversification

Economic diversification has become an urgent requirement for countries that rely on a single source of revenue. Oil revenues alone are not sufficient to support sustainable growth. For example, Saudi Arabia has recently begun implementing Vision 2030, which aims to reduce dependence on oil by developing sectors such as tourism, technology, and manufacturing. Through this vision, investments in new sectors are encouraged, helping to build a more resilient and robust economy. When economies diversify, they become less susceptible to external shocks, making it easier to recover from crises.

The Role of Economic Policies in Crises

Economic policies are considered one of the main tools that help governments deal with economic crises. In times of crises, monetary and fiscal policy tools can be utilized to ensure economic stability. For instance, during the global financial crisis in 2008, many countries took swift action to mitigate the negative impact of the crisis. In Saudi Arabia, measures were taken to support banks and small and medium-sized enterprises. These actions were not only limited to addressing crises, but also contributed to enhancing investor confidence and maintaining financial stability.

Shifts in Economic Behavior of Nations

Shifts in nations’ economic behavior are evident in how they deal with crises. In the past, some countries ignored potential risks, leading to exacerbated crises. Today, there is greater awareness of the importance of hedging and preparing for future crises. Countries that have invested in education and developing human capabilities have become more able to deal with challenges. This shift towards investing in human capital is what helps build more diverse economies that can withstand crises.

Challenges Related to Public Debt

Public debt is considered one of the major challenges facing developing economies. When the public debt-to-GDP ratio rises, governments must take precautionary measures. High public debt can restrict a country’s ability to invest in vital sectors such as education and infrastructure. Sometimes, governments may be forced to make difficult decisions, such as cutting public budgets or raising taxes, which affects economic growth. Therefore, it is essential to have effective strategies for managing public debt that ensure economic sustainability while also maintaining reasonable levels of debt.

Adapting to Global Changes

Rapid global changes require countries to be flexible and able to adapt to new conditions. From financial crises to climate change, economic plans must be comprehensive and take these changes into account. For example, fluctuations in commodity prices can impact national budgets, requiring strategies to adapt to these fluctuations. Developing innovations and adopting modern technology can help enhance their ability to face these challenges. Continuous preparedness and proactive planning are key to success in a changing economic world.

Envisioning the Economic Future

Ultimately, envisioning the economic future requires a thorough analysis of current trends. This depends on enhancing economic diversification, improving the business environment, and ensuring resource sustainability. Through these efforts, countries can ensure their economic stability and achieve sustainable growth. Furthermore, focusing on investment in education and training will help create a qualified workforce, enhancing the economy’s ability to innovate and grow. International cooperation and effective communication between countries can also contribute to promoting global stability and shared prosperity.

The Role of Banks in Protecting Depositors’ Funds

Banks are responsible for protecting depositors’ funds, which means they bear significant responsibility towards the individuals and businesses that deposit their money with them. This responsibility is known as safeguarding depositors’ money and ensuring it is not exposed to any risks. For this reason, banks must work in cooperation with the central bank, which plays an important regulatory role in this context. This cooperation requires the establishment of effective mechanisms to ensure the safety of funds, thereby enhancing public confidence in the banking system. For example, when banks take measures such as guaranteeing depositors’ funds, it reflects their commitment to safeguarding individuals’ money, leading to an increase in new account openings and deposits.

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It is also important to have clear boundaries for the risks that banks can take. If banks are allowed to engage in high-risk speculation or excessive lending without sufficient guarantees, it may lead to their collapse. Therefore, banks must follow strict risk management policies to ensure their stability and the stability of the economy as a whole. Additionally, the cultural and social environment plays a role, as societies tend to reject the idea of financial institution collapse, especially when these institutions manage depositors’ money.

For example, if there is an economic crisis affecting banks, it may lead to a loss of confidence in the banking system as a whole. Therefore, banks and regulatory bodies must work on developing effective strategies to avoid crises and maintain the stability of the financial system. This requires investments in technology and innovation to develop safer and more effective banking systems.

Investment in Economic Phases

When we talk about investing at the right times, we must consider the importance of timing in entering the markets. During financial crises, such as the 2008 crisis, there were promising investment opportunities at low prices, but many financial institutions lacked the courage to seize these opportunities. This situation requires bravery and a clear strategy, highlighting the importance of having integrated investment strategies based on careful market analysis and consumer needs.

Sovereign wealth funds are a good example of how to capitalize on opportunities during crises. Some Gulf funds managed to buy stakes in companies and assets at low prices, contributing to significant returns when markets rebounded. Herein lies the importance of strategic financial planning that ensures effective investment of state funds.

Moreover, investment policies should include diversifying the investment portfolio and not relying on one type of asset, such as government bonds. Diversification helps reduce risks and increase potential returns. Additionally, focusing on investing in technology and financial innovations can have a positive impact on financial returns.

Impact of Monetary and Fiscal Policies

Monetary and fiscal policies significantly overlap in their impact on the economy. The monetary policy adopted by the central bank affects interest rates and inflation, which in turn affects investment and spending decisions. For example, when the central bank takes the initiative to lower interest rates, it encourages borrowing and stimulates investment in projects. However, these policies must be balanced to avoid excessive inflation that may harm the economy.

On the other hand, the Ministry of Finance plays a key role in determining the state’s budget and resource allocation. When formulating the budget, focus should be placed on vital sectors that require investment to drive economic growth. This necessitates good coordination between the Ministry of Finance and the central bank to ensure that policies are integrated and support the overall economic goals of the state.

For example, in the case of rising public debt, the government may find itself forced to reduce spending on social services, which negatively affects citizens’ lives. Therefore, governments need long-term financial strategies that ensure sustainable economic growth and achieve a balance between revenues and expenditures.

Financial Technology and Its Role in the Future

Financial technology has revolutionized the way money and banking services are managed. Through technological innovations, individuals and businesses can conduct financial transactions more easily and quickly. Smart financial applications allow users to track their expenses and manage their budgets effectively, contributing to the enhancement of financial literacy. For instance, mobile payment services or financial apps are an essential part of daily life, facilitating access to financial services.

Also,

Financial technology contributes to the development of the banking system by improving operational efficiency and reducing costs. By utilizing artificial intelligence and big data analytics, banks can enhance customer experience and provide tailored services that meet their needs. This reflects the importance of investing in technology to enhance competitiveness and achieve positive outcomes.

Moreover, the emergence of non-traditional financial institutions, such as crowdfunding platforms and blockchain technologies, opens new horizons for financing and investment. These innovations allow individuals to access new sources of financing and realize returns through diversified investments. However, regulatory authorities must remain vigilant to ensure consumer protection and maintain the integrity of operations in these new markets.

Economic Liberalization and Enhancing Competition

Economic liberalization is considered one of the fundamental concepts underpinning many contemporary economic policies. Liberalization refers to the removal of constraints and barriers that impede economic activity, thereby increasing the level of competition in the market. In this context, the importance of involving all segments of society in the economic process is discussed. When the economy is liberalized, a competitive environment emerges that fosters innovation and growth, allowing individuals and companies from all backgrounds to enter the market and contribute to its development. An example of this is the government’s reduction of excessive support for certain products, prompting companies to improve the quality of their products and services to meet consumer needs. This approach not only helps achieve economic growth but also enhances social justice by providing new job opportunities for all segments of society.

Economic Enablers and the Importance of Removing Barriers

Economic enablers are considered the tools and resources needed for the market to successfully launch. It is essential to remove the barriers that limit these possibilities, such as excessive bureaucracy or poorly considered support. Throughout economic history, there have been numerous attempts to reduce these barriers, leading to lower unemployment rates and increased investments. When there is flexibility in the systems, investors can make quicker decisions, enhancing the opportunities for profit. It is important to understand that economic progress does not come solely from introducing new laws but also requires a culture that promotes individual initiative and risk appreciation. For example, stimulating innovation in technology may lead to fundamental changes in how companies operate.

Historical Experiences in Economic Diversification

Throughout history, there have been many successful experiences in diversifying the economy away from reliance on a single source like oil. In many countries, ambitious plans have been implemented aimed at achieving sustainable development by developing new sectors such as tourism, agriculture, and manufacturing industries. Countries that have been able to achieve this have managed to reduce the impact of fluctuations in commodity prices on their economies. For instance, we can mention the experience of the United Arab Emirates, which has relied on economic diversification since the beginning of its opening to the outside world, leading to the establishment of sustainable economic environments. By investing in education and innovation, the UAE has become one of the leading global destinations for business today.

The Role of Women in the Labor Market

The participation of women in the labor market is one of the important elements that enhances economic growth. Over the years, many countries have made significant progress in this area by opening new fields for women and supporting them in obtaining the necessary education and training. Governments must recognize that investing in women’s education and enhancing their role in the economy can lead to significant benefits, not only at the social level but also in terms of economic growth. Experiences of countries that supported women’s participation in the labor market have shown a positive impact on GDP. For example, in some European countries, policies have been introduced aimed at increasing the proportion of women in the workforce, leading to improved living standards for families and increased economic stability.

The Bank

Islamic Development and Its Role in Economic Development

The Islamic Development Bank is considered one of the important financial institutions that contribute to enhancing economic development in Islamic countries. The bank was established to serve as a platform for supporting development projects through financing and technical assistance. Over the years, the bank has financed thousands of projects aimed at improving the economic and social conditions in member countries. Through its investments in infrastructure, education, and health projects, the bank has contributed to improving the quality of life for millions. An example of this is the projects implemented in the field of renewable energy, which have helped many countries achieve their sustainable development goals, reflecting the bank’s ability to positively impact economic and environmental dimensions.

Education and Its Role in Improving Living Conditions

The educational process is one of the most important factors contributing to the improvement of the social and economic status of individuals and communities. When a suitable educational environment is available, children, especially girls, can learn and grow in safe and appropriate conditions. In many areas around the world, girls face significant risks when trying to access schools, as they may spend long hours traveling in unsafe conditions. However, by establishing schools in villages and remote areas, these risks can be reduced, thereby encouraging girls to pursue education.

For instance, in northern Nigeria, there has been ongoing concern about security situations, especially in areas close to Boko Haram. But thanks to the establishment of schools close to pastoral communities, girls have been able to receive education without the need to travel long distances. This approach has not only contributed to improving the level of education but also in enhancing the status of girls in society, which positively reflects on their families and environments.

Empowering Women through Small Projects

Empowering women by providing employment opportunities and small projects is a crucial step toward achieving sustainable development. In many communities, women play a pivotal role in the economy, especially in rural areas. By providing funding and support to them, their ideas can be transformed into real projects that contribute to improving their livelihoods.

For example, support was provided to women in northern Nigeria, where each woman received four calves and a goat to start their agricultural or pastoral projects. This type of support can radically change the lives of women and their families. One of them, after a period of hard work, was able to witness the first child from her family enter school, reflecting the positive impact of projects on education and hope for the future.

Islamic Solidarity and Its Role in Development

Islamic solidarity is a fundamental principle that reflects the strong ties between Muslim communities around the world. Over the past years, the Islamic Development Bank has played a prominent role in supporting development projects that benefit Muslim communities. This support is not limited to providing financial assistance alone, but also includes developing effective strategies to improve living conditions and enhance education.

The projects implemented by the Islamic Development Bank are a vivid example of how sustainable development can be achieved through cooperation and solidarity. Projects have been conducted in several countries, such as Guyana, Suriname, Indonesia, Mozambique, and Kazakhstan. These projects have not only affected the lives of individuals but also contributed to improving the local economy and enhancing the ability of communities to face challenges.

Economic Diversification and Its Impact on the Saudi Economy

Economic diversification is one of the central pillars for the success of any economy. In the Saudi context, Vision 2030 represents a significant shift toward diversifying income sources and reducing dependence on oil. This approach requires the implementation of radical economic reforms aimed at strengthening non-oil sectors.

Evidence indicates that

Statistics indicate that non-oil revenues have reached 36% of total government revenues, a record unprecedented rate. This step is a milestone in the history of the Saudi economy, representing a strategic shift that reflects efforts to support economic sustainability. There has also been a focus on improving the trade balance by enhancing non-oil exports, which contributes to achieving economic stability.

Empowering Youth and Its Role in Future Development

Empowering youth is considered one of the core elements for achieving sustainable development. Currently, youth are given a pivotal role in the economic and social transformation process. By providing suitable educational and professional opportunities, youth can become the future leaders who drive the development forward.

In Saudi Arabia, empowering youth is a fundamental part of Vision 2030. The importance of investing in youth capabilities and providing an educational environment that supports their aspirations has been highlighted. Crown Prince Mohammed bin Salman is a symbol of this movement, as he seeks to enhance youth participation in various fields. These initiatives contribute to building a generation capable of facing challenges and achieving accomplishments, positively reflecting on the economy and society as a whole.

The episode was summarized using artificial intelligence ezycontent


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