Guest blog by Farah Ismail, LEG ’23
The main economic problem that concerns me about my country (the Kingdom of Saudi Arabia) is the over reliance of its economy on one resource, fossil fuel. Saudi Arabia’s economy has always been very oil dependent, between the years 1970 and 2000 the oil economy was constantly between 30% and 60% of Saudi GDP. Other sectors have been dwarfed by the oil economy. Non oil GDP is highly correlated with oil revenues and government spending (up until 2015 this correlation was at around 98%). While oil has created enormous wealth for this country and its people, we know that oil reserves will not be around forever, and that this type of growth is not sustainable. On the other hand, while Vision 2030 programs, strategies and initiatives have one core objective, diversification, however, Saudi Arabia has been diversifying into adjacent, lower complexity products, and Saudi Arabia’s rate of diversification into complex products has been slow, hence the economy remains on the product space periphery, distant from complex products. This over reliance on oil made our economy very volatile and vulnerable to fluctuations in global oil prices, which as a significant impact on the Kingdom of Saudi Arabia’s economic growth and fiscal stability. Saudi Arabia’s government unveiled Vision 2030 back in 2016 with the sole purpose of moving from an oil based economy to a well diversified investment driven one, and over the past 8 years we have been planning, developing strategies, programs and initiatives to achieve our diversification objective.
I chose to apply and enroll in this course given its relevance to my career and to better understand how similar economies went through different growth cycles.
I learned many insights and relevant theories throughout this course, most importantly how to properly diagnose the problem and its roots, and how to dissect the issues through understanding the key binding constraints that our economy is facing. Using the fishbone to deconstruct the problem was very helpful to deeply think through the real challenges which is crucial in order to better articulate the solutions and policies. My second fishbone diagram is completely different than the first attempt submitted in the beginning of the course, the discussions and theories discussed during the public sessions and the group ones were very insightful and helpful in developing the thinking.
Another key learning for me was given the information revelation problem of my government, helped me rethink our organizational structure and how it can be more information-intensive, learning, and adaptive in identifying the problem and organizing around the capabilities necessary to adaptively address it. Furthermore, I was able to identify what organizations we would need to engage to address our growth challenge, and how I would categorize them as ‘high bandwidth’ organizations or not and how we might help them build or establish their ‘high bandwidth’ capabilities. The emphasis on KPIs and the importance of monitoring progress and adjusting policies accordingly is crucial and is one area I hope to emphasize more in my job.
My fishbone diagram (second attempt):
Additional areas that could be considered in the next course could be the challenges and opportunities of economic growth in developing economies, and maybe examining the unique challenges faced by developing economies in achieving and sustaining economic growth, and discussing topics such as poverty reduction, income inequality, inclusive growth, and the role of institutions in fostering development.
How does fiscal and monetary policy influence economic growth? Understand the role of fiscal policy (government spending, taxation, and budget deficits) and monetary policy (interest rates, money supply) in promoting or hindering economic growth. Analyze the trade-offs and policy considerations in using these tools to stimulate economic activity.
This is a blog series written by the alumni of the Leading Economic Growth Executive Education Program at the Harvard Kennedy School. 58 Participants successfully completed this 10-week online course in December 2023. These are their learning journey stories.