While the neoclassical theories operate u nder the banner of "the invisible hands of the market", other schools of thought promote "the visible hands of the state" through the pursuit of vigorous industrial polices as the main driving force of economic g rowth. The strong involvement of the Saud i state in the economy is demonstrated thus far by 8 successive 5-year development plans covering the period 1 970 - 2010. Governments have a wide range of policy options to consider while attempting to expand and stimu late their economies, such as selective protectionism from foreign competition (South East Asia), and undervalued currency (China), while others sought to extend specific support for targeted industries.
Unlike capital accu mulation, development through industrialisation enables the country to retain a considerable degree of control over its national assets while locally engaging its people in prod uctive business activities. Evidence confirms the broad assumption that "open economies" outperform "closed economies". However, the q uestion of whether export-led growth strategies are superior to import substitution strategies is still debatable (Krueger 1 965, cited in Lean, 1 998; Lal, 1 997; Wade, 1 990). Framing the question in terms of either/or seems unreasonable; alternatively, Saudi planners endeavou red to strike a balance that profits from the strength of both strategies.
Saudi Arabia has effectively implemented Ricardo's theory of comparative advantage by focusing on oil-related ind ustries. It capitalised on the richness of its oil and gas endowments and the very economical extraction cost of these natural resources to pursue an aggressive export-oriented , oil-based industrialisation strategy. Major Saud i industries, including the production of crude oil, petroleum refin ing , basic petrochemicals, cement, construction, fertiliser and plastics, are either com pletely owned by the state, or the state has a vested interest in them. By 1 995, the g lobal share of the Saudi petrochemical industry exceeded 5% drawing intense complaints to the WTO from competing European firms. They strongly argued that the subsided price of oi l/gas used in these ind ustries was too low to enable other firms to be competitive (Auty, 200 1 , p. 203).
Despite the relative success of the Saudi petrochemicals industry in captu ring a share in the international market, its impact on the local economy and e mployment dynamics is still minimal. The oil-based industry is generally a capital-intensive rather than a labour-intensive ind ustry, thus its capacity to ease the Saudi unemployment d ilemma by absorbing new job seekers into its ranks is extremely limited (El Mallakh, 1 982; Looney, 2004a; U S Library of Congress, 1 992). The US Library of Congress ( 1 992) reported that the Saudi oil industry in the early 1 990s req uired less than 2% of the total labour force. Therefore, the capital-intensive approach , which su ited the Kingdom in the 1 970s due to its small popu lation at the time, might be impractical in the 2 1 st centu ry, considering the high popu lation growth rate and the rising unemployment figu res among Saudis.
Parallel to the oil-based export oriented industrial strategy; the government took various measures and offered generous incentives to involve Saudi nationals in non hydrocarbon industrial activities to create import-substitution industries to meet local demand. The govern ment established industrial cities, distributed numerous land titles and extended industrial allowances as well as easy loans in its effort to encourage the private sector to invest in domestic industries. However, as Dr. AI-Kathiri - in a personal interview with the resea rcher - noted, the Saudi industrialisation efforts lacked transparency and long-term strategic planning and warned that it is unacceptable for the Kingdom to carry on without having industrial strategy (Fieldworks, 2004).
Large state firms dominate the Saudi economy. These firms include the oil firm Saudi ARAMCO, Saudi Arabian Basic Industries Corporation (SABIC), Saudi Telecommunications Company (STC), the Saudi Electricity Company (SEC), the Sa line
Water Conversion Corporation (SWCC) and the Saudi Airlines (Saudia). The size and the quality of the majority of industries owned and operated by the Saudi private sector a re not to the standards that enable the m to effectively compete in the international market either on q uality or on price grounds. By excluding oil and the oil industry, Saudi Arabia will virtually have little viable export power to compete and gain a foothold in the global market.
The relatively small Saudi market, the overvalued local currency and the lifting of government subsidies in order to comply with free trade requirements would certainly leave Saudi firms internationally uncompetitive and locally unprotected . Such limitations also render scale-economies and mass production as an i mpractical developmental option for Saudi Arabia. Unfortunately, the relatively easy access to finance , made available by the Saudi government to potential industria l initiatives in the 1 970s and early 1 980s, was not extended to include new businesses in other sectors of the economy. Another obstacle in the way of Saudi quest for industrialisation has been that the financial rewards in real estate and agency representation are many times higher than in manufacturing.
Le6n ( 1 998) contested the validity of the perceived role of the state in advancing economic development through vigorous industrialisation activities. He further argued that even the proponents of the state-led ind ustrialisation policies conceded that such policies are neither sufficient nor pre-conditions for economic development. The long held perception that the ind ustrial estate is a symbol of i mportance and national pride is being challenged. Indonesia, for instance , sought to combine its oil wealth with its massive workforce to pursue ambitious man ufacturing policies in order to create a viable export-led industrial sector. The effects of such polices on the overall economic development of the cou ntry fell short of expectations, since the emphasis on industrialisation was not matched by the same dedication to investing in other sectors of the economy. The Indonesian experience is a living example that demonstrates the need for more than capital and labour to develop a viable export-oriented industrial sector: most notably, it req uires the availability of a fu nctional and supportive institutional framework. Fu rthermore, the Indonesian experience underscores the importance of diversifying the base of the national economy by investing "in as many prod uctive a reas of the economy and in as many geographic locations as possible" in order to improve overall productivity and achieve even and balanced regional development (Pacific Economic Report,