Current Economic Development of Oil Exporting Countries

Current economicalal breeding of rock fossil fossil vegetable pet roleum colour export countries. (by the simulation of Saudi-Arabian-Arabian Arabia) Introduction3 OPEC and embrocate hurts. 4 History4 Common learning occupations of OPEC member countries6 Saudi Arabia8 History8 scotch discipline9 chief(prenominal) goals9 Role of the establishment10 New manu situationure heavenss10 mystic vault of heaven11 Foreign labor11 Social and diplomatical well-disposed organization12 Conclusion14 Literature15 Introduction. The report of this research is the economy and society of the inunct-exporting countries duration the topic stinker be stipulate forth as current economic victimisation of the cover-exporting countries and their prospects.As the best example we pay back chosen Saudi Arabia. The petroleum-exporting countries be on the whole-important(prenominal) players on the organismness market. They kindle invest up oil termss simplification or inc reasing declension rates, and mostly this is the gloss over mood they bug out m angiotensin-converting enzymey for their budgets, oil deposits exact great influence on their economy. Thats what is cal conduct Dutch disease and what their biggest problem is. Some measures in more than handle should be taken to get absolve of this disease, to embossment economic and loving structure, to check a shift to modern mannikin in their outgrowth.This raisement constitutes the thesis of this term-paper. The general purpose of this research is to draw coarse stages and common problems of oil-exporting countries development, try to explain them and eachude nearly solutions. The goals usher out be fixed as the remarking 1. To look at the OPEC, its narrative and common problems of the member Countries to follow the interconnectedness between oil determine and prosperity of the oil-exporters. 2. To delve brief history of Saudi Arabia for better understanding of that acres. . To musical theme the role of the government, insular celestial sphere, impudently intentness sectors, foreign labor and social and politic structure in economic development to show current situation and local problems in all these spheres. 4. In remnant try to forecast the possible flairs of further development. This term-paper usher out be utilize for further research in this sphere. OPEC and oil scathes. straight off oil is natural resource that has great influence on the development of oil-producing countries want Russia or the OPEC countries.If a soil exports huge amount of oil its toll determines budget of the landed estate, political situation, prices for a extensive range of franks. Its so because oil isnt skillful raw material for gasoline production, as rise for p stopping pointics, construction materials and so on. Many oil-exporting countries can set up oil prices reducing or increasing extraction rates, and in the uniform time no one in the modern creation can live without gasoline or electricity. So, we can say that oil is a scarper in which the main targets be index finger and bullion, huge sum of nones.But sometimes oil exporters go to the extremities their budgets dep peculiarity scarce on oil prices, in fact this field is a real coin spinner. Thats how the Dutch disease fathers. A wakeless example could be the OPEC countries. OPEC has the biggest oil deposits in the world ( roughly 80%) and they play a crucial role in oil pricing. This organization controls extraction rates (what leads to haughty of oil prices), foreign insurance policy and system of Member Countries. Thats why wed standardised to consider OPEC itself, its history and common problems. History.The Organization of bad-mannered oil Exporting Countries (OPEC) is a cartel of 12 countries made up of Algeria, Angola, Ecuador, Iran, Iraq, capital of Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the linked Arab Emirates, and Venezuel a. The organization has maintained its headquarters in Vienna since 1965, and hosts even meetings among the oil ministers of its Member Countries. T he OPEC Member countries came together to form this inter study organization with several(prenominal) aims. Some of the aims be To protect the pursuance of the member countries. To cave in sure that the price of petroleum products do not flip-flop much. To make certain a regular supply of petroleum oil to separate countries. To make sure that member countries get suitable income from sale of oil products. To find out policies to follow relating to production and sale of petroleum oil. However, OPEC has not always been able to contact all these aims. Venezuela was the first earth to pop off to state of wards the establishment of OPEC by approaching Iran, Gabon, Libya, Kuwait and Saudi Arabia in 1949, suggesting regular and next communication among oil-producing countries.It was a topical straits because all oil-exporting c ountries were use by such(prenominal) corporations as British Petroleum, Chevron, Exxon, Gulf, Mobil, Royal Dutch, pillow slip and Texaco, which controlled crude oil refining worldwide. These corporations form a cartel and reduced procural prices. ab initio the OPEC wasnt taken into account. europium and the U. S. didnt moot than Arabic governments could find a agree and reduce extraction rates. Honestly speech production first 10 foresighted time wasnt real successful for OPEC.But in the 1970-s with aid of 1973 oil crisis, Arab-Israeli conflict and second crisis in 1979 OPEC transformed into important political and economic force. By the way being resolve of OPEC is a huge responsibility. High oil prices argon the consequence of low extraction rate. But if one country in pursuit of towering ge atomic number 18r incomes tries to sell a little bit more than its quota is, consequently price goes down even for those countries that did e rattling occasion right. stan dardised a shot oil prices are lull high in comparison with 1990-s (when normal price per barrel was 22-28 dollars), save since June 2008 they clear dramatically fallen, as it is shown on the graph below.The war in Iraq and increasing enquire in Asian-Pacific Region, especially in India and China that are consuming large amount of fuel, can be named as a terra firma for such growth. Anyway the OPEC countries still have their problems and many of them are much the same because of heathenish, historical, political and economical similarity, some countries or so overcame them and otherwises didnt. Most illustrative get out be the example of Saudi Arabia as the country having the biggest oil deposits in the world. Common development problems of OPEC member countries. Below is the list of the natural problems which OPEC countries usually face.Not long ago Arabic countries were under the reign of the regular army and Europe, which exploited their resources leaving countries t hemselves underdeveloped. In the end of XX century e in truth(prenominal)thing revisiond. Briefly the strategy of their development could be described this way 1. Dependence on western countries. 2. 1970-s crises. influx of petrodollars. 3. Euphoria, thought slight investments and projects. 4. Attempt to create a new type of social structure. 5. Admitting mistakes, coming into court of new aims standardised development of disparate effort sectors, not only oil-extracting. all told these finiss have their common difficulties. Firstly, Arabic countries devolve behind all developed countries and because of their cultural specialty werent mark to base of operations innovations which were so needed. Women are still not interested in education almost 50% of them are illiterate. By the way it is one of the crucial problems in such countries the lack of improve deal, especially with higher(prenominal) technical education, consequently appears deficit of well qualified browseers on the plants and other enterprises. Employees were short not ready to start working on advanced equipment.Thats way many executive billets are occupied by foreign specialist, what isnt very peachy extract for the country. Second main problem is the Dutch disease too strong colony on one industry sector. Budget, backing standards, national projects all these waits only on oil prices, which are not always foreseeable and controllable. For example too quick winter reduces consumption of fuel, what reduces oil demand and consequently oil price. Many other factors have the same influence, and all of them resuscitate oil-exporters, making them too vulnerable.In Saudi Arabia 85% of budget are petrodollars, so its clear how important for them oil price fluctuations are. And the last important problem is that government not always can make tenablenessable investments. Arabic sheikhs started huge constructions and projects to the corona of the country which were usually un gai nful. Only afterwards this wish to eliminate money became weaker and investments more useful. Actually, these are main difficulties of OPEC countries. In every oil-exporting country governments more or less successfully tried to find appropriate solutions to these problems. Saudi Arabia. History.The Kingdom of Saudi Arabia is an Arab milkweed moreoverterflyal state. It is bordered by Jordan on the northwest, Iraq on the north and north-east, Kuwait, Qatar, Bahrain, and the United Arab Emirates on the east, Oman on the southeast, and Yemen on the south. The Persian Gulf lies to the northeast and the Red Sea to its west. It has an estimated world of 27. 6 cardinal, and its size is approximately 2,150,000 square kilometers. Today it is one of the few fastest growing countries in the world with a high per capita income of $20,700 Some figures Population 27,601,038 (0. 3% of world population) Density 11/km2 Urban population 80%GDP (2007) $555,055 billion crude oil resources 26 1. 2 billion barrels, 26% of world oil resources (amount that is enough for 86 years of consumption) Extraction rate 8 million barrels per day. Among Arabic countries Saudi Arabia is the richest, because its oil deposits are the biggest, like its OPEC quota. Country itself isnt very big, but population is growing. Literacy rate is very low only 63% and it is very serious problem, as was said earlier. Economic development. As it was mentioned, economy of Saudi Arabia depends on oil market and its unsurmountable to see it without taking into account oil industry.Because of oil export and money inflow this country made visible leap in development and immediately some indexes are just like in Europe or in the U. S. Society is underdeveloped too, leaving behind prejudices. Main goals. thither are three main goals for the state 1. GDP growth 2. Diversification of national economy. 3. Development of gentle resources. These goals were set 30 years ago and still being a topical questio n. But a accord of enterprises were put to reach these goals. For example in 1970 GDP was 22. 9 billion riyals and in 1982 already 524. 7 billion. A diversification is in like manner present. The role of oil sector is reducing.Processing industry was established, and in that location are a lot of financing projects. What is not less important, financial sector has appeared. But anyway, as of 2007, non-oil manufacturing contributed 10% to Saudi Arabian GDP and less than 6% of total participation. But development of human resources is falling behind. Actually the problem of absent headinged qualified labor force was resolved by inviting foreign specialists. Role of the government. Initially the most profitable oil deposits were exploited by western companies, but instantly the biggest oil producing confederation ARAMCO was nationalized and oil policy was reviewed.Now extraction rates became smaller and deposits were used in more wise way. Today more than 95% of all Saudi oil is produced on behalf of the Saudi Government by the ARAMCO. In June 1993, ARAMCO confined the state marketing and refining company (SAMAREC), becoming the worlds largest fully integrated oil company. But the second problem was how to spend money. Governors were wrong hoping that petrodollars inflow will last forever. Money was invested in useless projects, and some spending was just uncontrolled. It all led to overheated economy. in any case in that respect was an effort to copy western system of production, but it also wasnt successful.All these things were a reason to work out a new plan of economic development, attracting more confidential capital and making more credible investments. In the last few years there is a privatization tendency in Saudi economy, of melodic phrase except ARAMCO. Also government pledges oil industry, giving money for development of the new deposits. New industry sectors. In the world Saudi Arabia plays the role of crude oil exporter, and it isnt the best position on the world market. Thats why they are trying to find new profitable spheres. And one of them could be petrochemistry.This field grows every year and today Saudi Arabia is the main manurial supplier on the Middle eastern. Of course today its impossible to cure the Dutch disease, but mayhap someday oil exporting countries will not depend so much on oil prices. Private sector. In 70-80-s government created good conditions for offstage sector. Such things like transfers, legislative support, special banks and funds were aimed at supporting(a) this sector of economy. Powerful oil industry till now is a good base for economic development. The government is still attempting to promote growth in the private sector by privatizing industries such as power and telecom.Saudi Arabia announced plans to begin privatizing the electricity companies in 1999, which followed the ongoing privatization of the telecommunications company. Shortages of irrigate and rapid popul ation growth may constrain government efforts to increase self-direction in agricultural products. But this governmental support has the second side private enterprises are still hoping on attention and transfers from government and western partners. Without such support its more profitable to invest money abroad. And thats the problem. But anyway private sector is growing and private capital goes to high tech development and research.Foreign labor. As was said, there is a lack of well educated specialists on the plants. The government tries to promote so called Saudization national policy to encourage employment of Saudi nationals in the private sector instead of workers from South and Southeast Asia. in spite of these efforts, the country draws a significant fate of its labor force from foreign countries, especially from South and Southeast Asia (notably India, Pakistan, Bangladesh, Indonesia, the Philippines, Nepal, and Sri Lanka), East Asia, East Africa and from other Midd le Eastern countries. at that place are also some deal from North America, South America, and Europe. Hundreds of thousands of low- versatile workers and skilled workers from regions of the exploitation world migrate to Saudi Arabia, sometimes only for a short period of time, to work. Although exact figures are not known, skilled experts in the banking and services professions seek work in the Kingdom. Social and politic structure. An Arabic country always remains an Arabic country with its own culture, social and politic structure. Saudi Arabian culture in the main revolves around the religion of Islam.Islams two holiest sites, Mecca and Medina, are located in the country. Also it shouldnt be forgotten that it is the monarchical state. All it leaved an imprint on people and their set of mind. Although huge sums of money were spent on health care and educational programs, the social structure didnt change a lot. It is still important to which family or place you break down ruli ng establishment stayed the same, just like the attitude to women. Saudi Arabia is the only country in the world where women are taboo from driving on public roads.Women may drive off-road and in private lodging compounds, that can be very huge. Their attempts to change something usually lead to nothing. Several multinational human rights organizations, such as gentle Rights Watch, Amnesty International and the United Nations human Rights Committee have issued reports criticizing the Saudi jural system and human rights violation in various political, legal, and social areas, especially knockout limitations on the women rights. The Saudi government typically dismisses such reports as being immediately lies or asserts that its actions are based on its adherence to Islamic law.Political structure also is very traditional the monarch makes all decisions and any attempts to loosen his power, like advisory board, have failed. There is no freedom of speech and no political opposit ion, although there are a lot o people abroad who knock such policy. So, development of Saudi Arabia is very controversial. On the one hand, financial and oil-producing sectors are growing in high gear. On the other hand peoples set of mind didnt change and with this excess baggage its impossible to move forward.Other controversial thing government wants to keep Islamic values, but in the same time educational system is an exact copy of the American one, and American talk-shows and cartoons are demonstrated on the national television. There is an opinion that all it happened because of too fast growth. The society wasnt ready for petrodollars and all these goods which it gets. Thats why people have very vague ideas of what they need today or in the future new way of life or traditions and Islamic values. Conclusion. To sum it all up, wed like fright possible future of oil-exporting ountries. In a foreseeable future it is impossible to find alternative energy sources which could f ully substitute oil and gas. World demand will grow and there are only four countries which can increase extracting rates. These are Saudi Arabia, Kuwait, Nigeria and Gabon. It means that political and economic power of OPEC will grow. But also its obvious that raw materials like crude oil are cheaper than processed goods like gasoline. Thats why huge sums of money must(prenominal) be invested in the development of oil refineries and its a very important long term investment.By the way this exploitation process must involve not only industries but also people themselves, because a state can change only after its citizens. Anyway, dependence on oil prices is very unreliable and undesirable, like any dependence, even if it helps to finance social projects. Current economic crisis has shown that. Governments of oil exporting countries must find a agree between this Dutch disease with broad capital inflows and healthy but maybe not so rich economy.