Saudi Arabia’s manufacturing sector: looking beyond petroleum

Abstract

This policy report on Saudi Arabia’s industrial sector is the fourth in a series of reports aimed at identifying strategic options Arab countries have in undertaking structural transformation. Using the product space methodology, this report analyzes existing capabilities of selected economies by identifying products they currently export and determining which path they should follow to produce more sophisticated and strategic products. A study of Saudi Arabia’s product space reveals that the kingdom’s development path should focus on new complex products in the machinery/electrical clusters and a few products in the chemical community. In Saudi Arabia, enhancing production possibilities around existing industries will likely not produce leaps that are desired, meaning it will likely be necessary to place strategic bets or adopt industrial policy ‘in the large’ to ease the transition into new and more complex industries.