The future of the rentier state: A Qualitative Analysis of Saudi Arabia

This thesis provides an in-depth analysis on the political and economic consequences for rentier states and their elites, based on three presented reasons. Because of low oil prices, climate mitigation policies and the eroding competitiveness of oil, states are increasingly experiencing the changing structures of the global political economy. To overcome challenges, rentier states are diversifying their economies by emphasizing non-oil alternatives. Consequences are the viability of the rentier model and their overrepresented authoritarian elites are at risk. By investigating an exemplary case this research has tried to better understand the path of the rentier state. Results find Saudi Arabia has begun diversifying its economy in predominantly the tertiary sector and is simultaneously activating its labour force to promote employment outside the government and oil sectors. Fast growing sectors that are progressively providing employment for Saudi nationals are (1) Finance,...Show moreThis thesis provides an in-depth analysis on the political and economic consequences for rentier states and their elites, based on three presented reasons. Because of low oil prices, climate mitigation policies and the eroding competitiveness of oil, states are increasingly experiencing the changing structures of the global political economy. To overcome challenges, rentier states are diversifying their economies by emphasizing non-oil alternatives. Consequences are the viability of the rentier model and their overrepresented authoritarian elites are at risk. By investigating an exemplary case this research has tried to better understand the path of the rentier state. Results find Saudi Arabia has begun diversifying its economy in predominantly the tertiary sector and is simultaneously activating its labour force to promote employment outside the government and oil sectors. Fast growing sectors that are progressively providing employment for Saudi nationals are (1) Finance, Insurance, Real Estate & Business Service and (2) Transportation & Communication sectors. Implications are that Saudi Arabia will cease to be a rentier state in the future and that, in tandem, the historically secure position of its authoritarian elites is likely to be at stake. Rising education levels, specialization in the private sector and urbanization levels, give indication the Saudi Arabian society will be able to articulate a demand for representation and accountability. Considering the late introduction of a 5% VAT tax and likely future tax increases, the probability of democratization processes is increasing. The adage “he who pays the piper calls the tune” will likely prove no exception in case of the rentier state. Ramifications for other rentier states are inclined to be corollary to that of Saudi Arabia. Albeit, heterogeneity among rentier states could prove to be detrimental for their survival.Show less

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The future of the rentier state: A Qualitative Analysis of Saudi Arabia