Power Centralisation and Economic Diversification: The Political Economy of Saudi Arabia Based on Vision 2030

Abstract

Since the oil boom in the 1970s, the strategic focus of the Kingdom of Saudi Arabia (KSA) has been firmly centred on the pursuit of economic diversification beyond oil. Despite recurring efforts since the 1970s, the Kingdom’s diversification strategies exhibit a cyclical pattern, strengthening in response to declining oil prices and subsequently receding when oil prices rebound, raising questions about persistent challenges to diversification. Numerous views have been proposed to explain this dilemma; however, they tend to overlook a critical aspect: the complex nature of the Saudi regime’s power structure. In January 2015, King Salman’s accession to the throne, coupled with Crown Prince Mohammed bin Salman’s ascendance as KSA’s de facto ruler, marked a turning point, leading to the launch of Vision 2030, which aims to reduce the economy’s dependence on oil. Since then, KSA has seen significant shifts in its economic, social, and political fabric under Vision 2030. This thesis investigates the impact of the Crown Prince’s centralisation of power on the implementation of Vision 2030. This thesis is based on field research in KSA. The methodology encompassed a spectrum of data collection techniques, including over 100 interviews with ministers, government officials, members of the royal family, development advisors, academics, and citizens, coupled with the analysis of primary sources. This thesis argues that power centralisation under the Crown Prince has brought an end to state fragmentation, a trait that facilitated inefficiency within the Saudi bureaucracy for five decades. The subsequent implementation of Vision 2030 has spurred increased government efficiency and expedited economic diversification initiatives in the industrial, investment, tourism and entertainment sectors and in initiatives such as the Aramco initial public offering. 6 On the other hand, the implementation of Vision 2030 is not without challenges. The long standing influence of the rentier economy has complicated the swift implementation of Vision 2030, especially through inherited challenges such as public-sector expansion and private-sector fragility, while emerging challenges like the absence of a political framework, mega projects, and an undefined economic structure have also impeded implementation. By evaluating the historical context of economic diversification, this thesis examines the period from the post-2015 era until 2022. It argues that centralisation has facilitated bypassing bureaucratic hurdles and diminishing the influence of narrow interest groups. This significant change, essential for advancing the agenda of economic diversification under Vision 2030, marks a departure from the Kingdom’s politics pre-2015. This thesis concludes that the Crown Prince’s centralisation of power has positively influenced economic diversification efforts based on Vision 2030.