Prior to 1970 the Saudi Government faced severe socioeconomic problems two of which were: (1) the contribution of the private sector to the Gross Domestic Product was low, and (2) the oil revenues were the main source of the national income. As the oil revenues rapidly increased between 1972 and 1981, the government used every means at its disposal to encourage the private sector. The goal was to diversify the sources of national income in order to decrease the dependency on oil revenues as the main source of national income. To achieve this the government has provided interest-free loans to the private sector which, along with the demand, has increased the gross domestic fixed capital formation of the private sector. The purpose of this study was to theoretically explain the phenomenal expansion of the private sector. Three models were developed from the least to the most difficult. The main principle of the models is that the expansion of the private sector is stimulated because of the low cost of capital in Saudi Arabia. Since oil revenues (the main source of government expenditures) have decreased in recent years questions have been raised concerning the ability of the private sector to support the economy. It is argued that the demand of national and international markets will increase in the future, thus allowing the private sector to expand further. Even though the cost of capital will increase, Saudi companies will be able to compete either nationally or internationally. In addition, the competitiveness of the Saudi capital market may increase which will, in turn, benefit the Saudi economy.

No description available.

No description available.

The Saudi Arabian natural gas industry and its downstream activity, particularly petrochemicals, is characterized by its dependence on the country's crude oil production. This is because the main input into these industries is associated natural gas. Most of the Saudi gas-based petrochemical products are sold in international markets where their cost advantage over naphtha-based products is directly proportional to the crude oil price. The profits from Saudi natural gas and its dependent industries are influenced by two countervailing factors. The first is that of the level of crude oil production which determines the utilization level of the gas industry. The second is the international crude oil price on which the returns from petrochemicals, liquified petroleum gases and natural gasoline are directly proportional. This creates a tradeoff situation and necessitates finding a crude oil production level subject to optimizing the country's gas utilization system. A linear programming model is constructed to establish this level and to investigate possible ways to satisfy the country's future gas requirement. The results of the model indicate that the associated gas produced in conjunction with 6.78 million barrels of crude oil per day is needed to operate the gas utilization system at capacity. However, the model estimates that gas associated with a daily crude oil production level of 4.35 million barrels produces the highest returns from the system. Furthermore, to meet the country's gas requirements for 1990 and 2000, based on 4.35 million barrels per day of crude oil, the current daily nonassociated gas capacity should be expanded to 2.27 and 3.15 billion cubic feet, respectively.