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Globalisation has developed alongside the growth of information technologies. These have in turn required states to pursue policies promoting adaptation to a knowledge-based economy reliant on 'human capital' (a phrase first coined in 1961 by Theodore Schultz). This thesis explores and assesses one aspect of the Saudi Arabian government's response to this globalisation process: investment in capital and development of the population's workplace skills requirements through the King Abdullah Scholarship Programme (KASP). The study considers how countries such as the Kingdom of Saudi Arabia (KSA) are looking to maintain their competitive position in the global economic sphere and to increase understanding of the fact that future economic and productivity gains will be dependent on individuals developing their skills, knowledge and specific workplace competencies. The people of a country are themselves potentially valuable assets to be nurtured and utilised. Against this background, the thesis seeks to investigate the effectiveness of the KASP in achieving human capital development and fulfilling policy goals. These strategic objectives are related to the growth and development of the human capital in the country and diversification of the economy. The thesis has three main sections. The first sets out the overarching research question and the research questions and begins to engage directly with the themes identified in the literature review, including definition, measuring human capital and how to engage with the literature. The overarching research question for the thesis is, ‘How has the Government of KSA sought to invest in human capital through the KASP, and to what extent has the programme been successful?” The second phase sets out the research methodology. Data was collected using a triangulation method, combining quantitative and qualitative methods. The third phase analyses the data and the findings of the study. Here, it is argued that KSA has encountered numerous challenges because of over-dependence on oil to run the economy. In addition, rapid grown in the population has exerted additional pressure on the country, especially regarding women’s issues of equality and rights, since women make up half of the population. In the midst of these major economic challenges, the primary task undertaken by the government of KSA has been to invest in human capital development to generate employment opportunities for the growth and diversification of the economy. In this thesis, I attempt to explore, through KASP, the extent to which the initiatives taken by the government of the KSA to improve human capital have been effective or not. This thesis is in alignment with the “Vision 2030” of the country that was announced by Deputy Crown Prince Mohammed bin Salman on the 25th of April 2016. The Vision 2030 reform plan is a package of economic and social policies designed to free Saudi Arabia from dependence on oil exports. The reform plan is based on three main pillars: the Kingdom’s status as the heart of the Arab and Islamic worlds, the Kingdom’s determination to become a global investment powerhouse to stimulate the economy and diversify revenues and the Kingdom’s intention to evolve into a global hub by taking advantage of its unique strategic location connecting three continents, Asia, Europe and Africa. In order to achieve its goals, Vision 2030 focuses on reshaping the education system to contribute to economic growth, in line with the market needs, providing equal opportunities, focusing on skills and competencies of young generation as the important assets to attend global talent and qualifications, lower the rate of unemployment and increase the participation of women in the workforce. All have been tackled and discussed in the thesis. The themes of this thesis deal with the challenges facing KSA such as globalization, economic reform and human capital investment.

The macroeconomy of Saudi Arabia has been dominated by oil exports which between 1970 and 1995 accounted for more than 85% of total export earnings. Due to the fact that oil is an exhaustible resource, the price of which fluctuates considerably, and is produced in an enclave economy, the Saudi Arabian government had recognised the needs to diversify their economy away from oil as the main source of income. Since the oil price crashed in 1986, the Saudi Arabian government has adopted a new policy to develop non-oil sectors, such as manufacturing, agriculture and more recently, non-oil minerals. The main objective of this study is to evaluate the contribution of the non-oil minerals sector to the economic growth of Saudi Arabia during the period 1970-1995, using three different approaches. These approaches are the export portfolio approach, the input-output approach and the Dutch disease approach. The empirical findings of this study show the following: 1. A non-oil export portfolio analysis provided guidance to the Saudi Arabian planners who seek simultaneously to reduce export earnings instability and achieve economic growth. An increase in the volume of machinery and transport equipment commodities could produce an optimum portfolio due to both price trends and stability of price over time. Other exports, including non-oil mineral commodities, are unstable and have relatively negative price trends. 2. Even though preliminary results indicate that the non-oil minerals sector has a relatively low integration with other sectors, when the impact of inducing final demand is taken into account, this sector shows the highest income and the second highest employment multipliers. These results indicate that if this sector were to be stimulated by increasing final demand, it may well generate more income and employment than other sectors. Therefore, the application of an input-output approach was extended further to estimate the impact of three new promising nonoil mineral projects on the Saudi Arabian economy. Moreover, the construction and operation phase's multipliers reflect the potential of the non-oil minerals sector. 3 With regard to the effect of a boom in one sector of the economy on the rest of the sectors, the oil sector boom in the 1970s in the case of Saudi Arabia conforms very closely with the assumptions of the Dutch disease theory.

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Oil is an important part of the Saudi economy. With the volatility of oil prices and the pressing needs of economic growth and development, the Saudi Arabian government has planned to diversify its sources of income. To this end, the majority of effort has focused on developing the non-oil export sectors, particularly in manufacturing. Despite government efforts to enhance the ratio of non-oil export to total exports, it remains weak, amounting to 15 per cent of total exports in 2010 (which compares unfavourably with the average for other Middle East and North Africa countries (MENA) which stood between 30-46 per cent in 2010). This research aims to provide a comprehensive assessment of non-oil exports and their financing in Saudi Arabia. This study uses unique, primary data, collected through a custom designed questionnaire and a unique sample of Saudi exports. There is currently no comparable database for Saudi firms, or for other MENA countries trying to engage in export diversification strategies. This dissertation comprises three main empirical parts which are; ownership structure and operations, finance, and business climate, respectively (chapters 3, 4 and 5). In the first, the econometric analysis shows multiple factors have a significant positive impact on export intensity, including: whether the firm is shareholding, the age of the firm, internationally and locally recognised quality certificate, length of export experience, supplies of domestic origin, independent retail stores, TV or radio advertising, a foreign language website and finally an export marketing plan. Regarding the impact of financial factors on exports at firm level, the econometric analysis showed that younger firms are more likely to be credit-constrained than older firms. Finally, this dissertation provides evidence of the relationship between the business environment, competition and firm’s exports. The main findings show that firm performance, measured as intensity of exports, is boosted by an increase in experience of export and hindered by a high level of labour, competition, custom and trade regulation, and the informal sector.

This thesis is based on three empirical essays in financial development and economic growth. The first essay, investigated in the third chapter, the effect of financial development on economic growth in the context of Saudi Arabia, an oil-rich economy. In doing so, the study distinguishes between the effects of financial development on the oil and non-oil sectors of the economy. The Autoregressive Distributed Lag (ARDL) bounds test methodology is applied to yearly data over the period 1968 to 2010. The finding of this study is that financial development has a positive impact on the growth of the non-oil sector. In contrast, its impact on the oil-sector growth and total GDP growth is either negative or insignificant. This suggests that the relationship between financial development and growth may be fundamentally different in resource-dominated economies. The second essay revisited, in the fourth chapter, the relationship between financial development and economic growth in a panel of 52 middle-income countries over the 1980-2008 period. Using pooled mean group estimations in a dynamic heterogeneous panel setting, we show that there is an inverted U-shaped relationship between finance and growth in the long-run. In the short run, the relationship is insignificant. This suggests that too much finance can exert a negative influence on growth in middle-income countries. The finding of a non-monotonic effect of financial development on growth is confirmed by estimating a dynamic panel threshold model. The third essay empirically explores cross-country evidence of the effects of financial development shocks on economic growth. It employs a Global Vector Autoregressive (GVAR) model, which allows us to capture the dynamics of this relationship in a multi-country setting, and connects countries through bilateral international trade. Given the progressive role that Brazil, Russia, India, China and South Africa (BRICS) play in the world economic arena, this essay focuses on whether financial development in one BRICS member state affects economic growth in the other BRICS. To this end, the study finds empirical evidence that credit to the private sector has a positive spillover effect on growth in some of the BRICS countries. However, the results imply that the current level of financial integration among the BRICS countries is still not mature enough to spur economic growth for all the BRICS members.