Why Saudi Arabia and Afghanistan are so different economically

Saudi Arabia and Afghanistan may be close in proximity, however, they share few similarities economically, in regards to government, language, and education. The differences between these two countries have placed them on opposite ends of the spectrum in relation to their GNI (Gross National Income) per Capita.

Where in the world are Saudi Arabia and Afghanistan?

Saudi Arabia borders the Persian Gulf and the Red Sea, and is just north of Yemen. Oceanic access opens up trade routes for Saudi Arabia, although the country’s lack of rivers within its borders monopolizes trade hubs in sea-side towns. On the other hand, Afghanistan is landlocked, which poses an array of disadvantages. Located in Southern Asia, Afghanistan is Northwest of Pakistan and East of Iran. Isolation from key maritime trade routes is one of Afghanistan’s key geographic issues.

Saudi Arabia’s government still maintains a Sunni Muslim dominated Monarchy, and it’s laws and beliefs are tightly interwoven with the Islamic faith and the teachings of the Prophet Muhammad in the Qur’an. The Saudi Government controls 13 provinces within its country. Afghanistan is an Islamic Republic and commands 34 provinces within the region which makes it a challenge to centralize and unify the Afghan people.

With a population of roughly 27 million, Saudi Arabia emits linguistic unity with its predominantly Arabic speaking population. Even though this may discourage tourism, it is a strong centralizing force for the Saudi’s. Similarly, religion brings about 90% of Sunni Muslims together in Saudi Arabia, and 80% in Afghanistan. However, this creates tension between Sunni Muslims and Shia Muslims seeing as though the Shia’s make up less than 20% of the population in both countries (10-15% in Saudi Arabia/19% in Afghanistan).

Roughly 31 million people are living in Afghanistan, with the Lingua Franca being Afghan-Persian (Dari) which is spoken by 50% of the population. Other languages spoken in Afghanistan include; Pashto (35%), Turkic Languages (11%), and thirty other minor languages. There are also (roughly) 18 different nationalities within Afghanistan. The Afghan being the most dominant, followed by the Tajik, Hazara, and Uzbut; accompanied by 14 smaller recognized ethnicities. In contrast to Saudi Arabia’s dominating Arabic speaking population and Arabic nationality, one would think that such diversity of nationality and language would be a centralizing force for Afghanistan’s growth and culture. On the contrary, this has proven to be a decentralizing force for Afghanistan, especially in regards to the conflict between different nationalities/ethnicities within the region, even though it may contribute to a richer ‘cultural’ life.

Correspondingly, a language’s unity in one country promotes literacy amongst citizens, whereas in another language diversity can cause a decline in the education sector. Saudi Arabia’s literacy for those over 15 years of age is at 94.4%, whereas Afghanistan’s literacy for the same age group is at 31.7%. Literacy is a viable factor when comparing two country’s economies, because it affects employment of both domestic and migrant/foreign workers.

Age Structure: 0 – 14  15 – 24  25 – 54 55 – 64 65+
 Saudi Arabia: 27% 19.3% 45.4% 4.5% 3.2%
 Afghanistan:  42% 22.2% 29.4% 3.9% 2.5%
(Source: Central Intelligence Agency [CIA] The World Factbook 2015)

How does the Age Structure of these countries affect  unemployment?

The table above shows Saudi Arabia’s dominant middle-aged work force. In contrast, Afghanistan has a moderate middle-age (25-54) and youth (15-24) population that supports an overwhelming sum of children (0-14). Age structure within a country can help us understand how literacy and education in combination with population growth rates affects employment (or lack thereof).

Saudi Arabia has an unemployment rate of 28.3%. Which isn’t ideal, but it’s an improvement from Afghanistan’s unemployment rate of 35% (Data based on ages 15-24).  It is likely that Saudi Arabia’s unemployment rate for those between 15 and 24 years old is due to a growing middle-aged group, which outnumbers their younger counterparts by a full 26%. This divide is caused by a slowing growth rate within a country. Currently, Saudi Arabia’s growth rate is 1.49% and Afghanistan’s is 2.29%. Which explains why Afghanistan is now struggling to support a sizable increase in young children, and the increased unemployment rate for those between the ages of 15 and 24 who are most likely caring for those children.

Even though there is a crippling young population in Afghanistan, the middle-aged (25-54) only outnumber youths (15-24) by 7.2%, and are most likely struggling to find work because they must rival cheaper foreign labor and migrant workers.

HEATH DRUZIN/STARS AND STRIPES
HEATH DRUZIN/STARS AND STRIPES

Similarly, Saudi Arabia also competes with migrant workers and foreign labor; seeing as though the country has roughly 6 million foreign workers. This is due predominately to the lack of diversity in the industry sector. By sector, Saudi Arabia’s workforce is more concentrated on the industry sector, whereas Afghanistan’s concentration lies predominately in the services sector.

As an oil-based economy, Saudi Arabia the leader in UNESCO (United Nations Educational, Scientific and Cultural Organization) for Oil and Natural Gas output, and the country capitalizes on its share of 16% of the world’s oil supply.  Petroleum accounts for 80% of budget revenues, 45% of GDP, and 90% of all export earnings.

In contrast, Afghanistan exports natural gas and petroleum, but does not have strong supply of oil and natural gas resources that geographically gives Saudi Arabia more oil power in the global market. Since oil does not generate a steady income for the country’s budget, Afghanistan exports in lead, iron ore, zinc, talc, and other minerals, as well as precious and semi-precious stones. Industrially, there is some small-scale production of textiles, bricks, shoes, cement and other items such as hand-woven carpets; however, Afghanistan’s main export is opium.

Saudi Arabia and Afghanistan both export to India. However, Saudi Arabia exports to predominately to China, Germany, South Korea and Japan; whereas Afghanistan exports to Pakistan and Tajikistan but it also relies heavily on foreign aid and imports from countries such as Pakistan, the United States, Russia, India, Kazakhstan and China. Even though Saudi Arabia is relatively “well off” due their oil-based economy, they only consume 2% of their GDP within the agricultural sector, ergo they must import food (e.i. rice from India) which creates food insecurity within the country.

One of the reasons why there is such a heavy contrast in Gross National Income (GNI) output between these two countries is because their Gross Domestic Product consumption by sector differs. Saudi Arabia relies heavily on their industrial sector, because they are an oil-based economy and have a working-class that is educated enough to be able to fill these positions, and where they lack labor they make up for in migrant workers. In contrast, Afghanistan’s GDP consumption lies more within the Services and Agricultural sector since most of their exports require more hands-on experience and labor.

GDP: Consumption by Sector        Agriculture          Industry          Services
 Saudi Arabia  2% 59.7% 38.3%
Afghanistan  24.6% 21.8% 53.5%

(Source: Central Intelligence Agency [CIA] The World Factbook 2015)

Even though Afghanistan could stand to follow Saudi Arabia’s example of raising their Industrial GDP consumption, the Saudi government implement some of the same practices of Afghanistan’s agricultural sector that brings the food security to the country. However, this remains a geographic challenge for Saudi Arabia because only 1.5% of the country’s land is arable (able to grow crops). In addition to food insecurity, it also requires more than $100 per barrel of oil to maintain its domestic budget.  With the price of oil falling more rapidly as the years pass, the country must reinvent their Agricultural sector in order to survive the declining price of oil in the international marketplace.

Saudi Arabia, a leader in the international marketplace due to its oil-based economy, is in good standing in regards to GNI per capita. However, if the country does not become more serious in diversifying its exports it may begin to decline economically. Some efforts are beginning to arise in regards to diversification such as exploration of power generation, telecommunications, natural gas, and petrochemicals.

Just as Saudi Arabia must adapt to the changing economic standard for oil prices, Afghanistan must also reinvent itself in relation to reforming the educational infrastructure within the country. Moreover, if Afghanistan can increase educational efforts, they may be able to lower the statistics stacked against them, such as; 36% of Afghans living under the poverty line, 35% unemployment and (due to their high number of children 0-14 years old) reducing the 30% of child labor.

As we compare and contrast these two culturally rich countries, we can begin to understand foreign relations through the culturally rich economic viewpoint of both the Saudis and Afghans in order to get a glimpse into what makes or brakes a country. When the American paradigm is set aside we can truly begin to immerse ourselves with a society and comprehend their international actions and policies.

In conclusion, even though Saudi Arabia and Afghanistan are within the same ‘Middle-Eastern’ region, and share some religious beliefs; the contrasts within their governmental structure, language diversity, literacy, economic structures, and allocation of resources all contribute to their place in international politics today.

AUTHOR:  Rebekah Abigail Dobbs


SOURCES:

[1] Central Intelligence Agency [CIA]. The World Factbook. 2013-14. Washington, DC. Web. April 15, 2015. <https://www.cia.gov/library/publications/resources/the-world-factbook/&gt;

[2] The Wold Bank Group. GNI per capita. 2015. Web. April 15, 2015. <http://data.worldbank.org/indicator/NY.GDP.PCAP.CD/countries/&gt;

[3] Lippman, Thomas. Middle East Policy Council. Saudi Arabia’s Quest for Food Security. 2010. Web. April 15, 2015. <http://www.mepc.org/journal/middle-east-policy-archives/&gt;

[4] Steven L. Lamy, John Baylis, Steve Smith, Patricia Owens. Introduction to Global Politics. Second Edition. 2013. Oxford University Press. Print.

[5] Les Rowntree, Martin Lewis, Marie Price, William Wyckoff. Globalization and Diversity – Geography of a Changing World. Fourth Edition. 2014. Pearson Education, Inc. Print.

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