Brazil
Regional development of rural areas a potential ‘growth engine’ for KSA
Bringing rural and underdeveloped regions in Saudi Arabia on par with urban centers is a massive opportunity for the Kingdom to accelerate its economic progress, finds analysis from Arthur D. Little.
“The potential impact of regional development on Saudi Arabia’s gross domestic output (GDP) is vast,” says Eddy Ghanem, partner at Arthur D. Little.
Demonstrating the potential, Arthur D. Little uncovered the differences in average GDP per capita between urban centers and rural areas. While GDP per capita in established urban centers including Riyadh, Dammam, and Jeddah averages around SAR 107,000 ($28,500), the annual GDP per capita stands at around SAR 73,000 ($19,500) in regional centers such as Aseer, Al-Qaseem, and other provinces.
Closing the gap between the two regions could unlock billions of annual GDP contribution. “Narrowing the GDP per capita gap between major urban hubs and regional territories by only 10% could potentially inject SAR 27 billion (approximately $7.2 billion) into the national GDP annually,” says Ghanem.
To come to its estimate, Arthur D. Little studied regional development plans in other countries such as Brazil and Spain. A series of socio-economic initiatives in those countries managed to elevate regional areas, in the process uplifting national income.
“Developing Saudi Arabia's regional economies is a crucial strategic move with far-reaching economic implications. By strategically tapping into the potential of areas beyond major cities, the Kingdom paves the way for inclusive growth and gains momentum to become one of the world’s 15 largest economies,” says Ghanem.
At the start of 2024, Saudi Arabia ranked as the 19th economy in the world. Mid-way the year, the nation has booked further growth and progress.
To unlock the opportunities in regional development, “a multifaceted approach encompassing strategic vision, robust governance, human capital development, infrastructure enhancement, and investment attraction is needed,” says Tobias Aebi, Principal at Arthur D. Little. “These pillars serve as the foundation.”
Strategy
Harmonize regional strategies with national priorities, capitalize on local advantages, and prioritize sustainable development practices.
Governance
Secure commitment from stakeholders, establish clear frameworks, and implement coordination mechanisms to ensure seamless collaboration.
Human Capital
Invest in tailored development programs to equip the workforce with necessary skills, while fostering retention through appealing living conditions and incentives.
Infrastructure
Adopt an integrated approach to infrastructure development, exploring diverse financing models to bridge regional disparities effectively.
Investment
Facilitate private sector engagement through dedicated units, strategic promotion of opportunities, and comprehensive support services, while leveraging entities like the Public Investment Fund to stimulate growth.
“Incorporating these elements into regional development initiatives will not only propel Saudi Arabia toward its global economic aspirations in line with Saudi Vision 2030 but also unlock social potential across the Kingdom’s regions,” concludes Aebi.
