The term “command economy” which is often used to describe Saudi Arabia’s economic system frequently comes up when discussing the country! Although the country does possess some elements of a command economy it isn’t a complete command economy. We will briefly discuss the definition of a command economy and how Saudi Arabia’s economic system fits within that category 🇸🇦 ️ 🆙 ..
A command economy is an economic system in which the state manages production and resource allocation! In such a regime government makes all economic decisions sets prices, wages, and production targets; they also determine what goods and services are produced, their quantity, and prices at which they will be sold. Command economies are commonly found in countries that have central planning mechanisms like China Cuba or former Soviet Union.
In Saudi Arabia, the government plays an active role in the economy. It owns and operates certain large industrial and commercial enterprises . Furthermore the government sets prices and wages and influences the production of certain goods, and services . All major banks are owned and operated by the government as well 🏦. The government also sets the prices of oil which has long been the backbone of the Saudi economy.
However Saudi Arabia is not a pure command economy. It has elements of a command economy but the country also has elements of a market economy. The private sector is allowed to operate in certain industries and the government does not have total control over all economic decisions. The government does not for example directly set prices for goods, and services produced by private businesses. Furthermore the government does not directly control the production and allocation of resources.
Saudi Arabia is also working to promote private enterprise and open up its economy for foreign investment. The government implemented a variety of free-market reforms and reduced the state’s involvement in some industries. To attract foreign investment the government also implemented tax and regulatory reforms .
Saudi Arabia does have some elements of a command economy but it is far from being completely one. The government has taken steps to open up the economy and promote private enterprise. Furthermore they do not directly set prices nor do they have total control over all economic decisions – thus one can safely say that Saudi Arabia does not possess a command economy 🇸🇦 ️ 1️⃣. … .
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