How Discovery of Oil Has Affected State Building of Saudi Arabia Essay

How Discovery of Oil Has Affected State Building of Saudi Arabia - Essay Example The post-World War II period of growing demand for cheap and reliable suppliers of oil for rebuilding Europe was a great boost to the unity of the Saudi Arabian regions, and to the developing oil industry in the state. The attractive revenues that were realized during the reign of Abd al Aziz Al ibn Abd (1932-1953), strengthened his position and gave him the power to exert a higher political and economic influence over his territories (Country Studies par 4). The Saudi state became the pervasive economic change agent, replacing the initially differentiated economy with one that relied entirely upon the state's expenditure. In the 1970s and early 1980s, the rapid increase in oil prices enabled the Saudi state to meet its long-term financial obligations (Country Studies par 9). The huge oil revenues, in addition to delays in expenditures and the Saudi economy's restricted absorptive capacity, brought about large financial surpluses in the economy. Majority of these surpluses were inves ted in reputable international financial institutions and securities. The state is one of the leaders in the oil market in the 1990s, found it hard to diversify its economy (Country Studies par 6). This government has however, raised the average living standards of Saudi citizens’ to among the best globally, and established excellent infrastructural facilities and social services for its people. Being the major source of revenue, the oil industry has been an area of keen interest to the government.