Business between Saudi Arabia and United States
Business between Saudi Arabia and United States
Introduction
Saudi Arabia was instituted in the year 1932 and has the big influence on global political system and economy due to huge oil reserves. Saudi Arabia propounded and strengthened Islamic faith. Hue oil reserves and strategic location make Saudi Arabia very important to United States. Official business relationship between Saudi Arabia and America started in year 1940. The relationship faces several challenges in terms of terrorism and recently on Al-Qaeda. This paper discusses the business relationship between Saudi Arabia and United States.
Discussion
Saudi Arabia plays an important role in managing socio-economic and political events in Arab & Islamic countries. America and Saudi Arabia both deal very closely on a broad range of global and local issues. Saudi Arabia is under the phase of transformation, and America appreciates efforts made by the region. Effective leadership style and efforts towards prosperity make Saudi Arabia a region of business. Saudi Arabia is an important partner in handling security and terrorism related issues by providing financial assistance, military support and diplomatic cooperation.
America and Saudi Arabia work together on security issues by providing fighter aircrafts, missile system, bombs, armored and helicopters to Saudi Arabia. Saudi Arabia and America both enjoy strong business relationship, as America is biggest trading partner of the Saudi Arabia. America exports the large quantity of variety of goods to Saudi Arabia. Both nations executed a trade agreement in order to facilitate their business activities. America imports the large quantity of oil from Saudi Arabia around 1 million barrels/ day (U.S. Department of State, 2013). For last more than seventy years, America and Saudi Arabia are enjoying good business or economic relationship. Both nations involve in active trading of goods and natural resources.
America and Saudi Arabia both are active members of various international organizations such as World Trade Organization, International Monetary Fund, United Nations, and World Bank. In year 2010, United States total trade with Saudi Arabia was USD 48 billion. This trade includes export of USD 16 billion and import of USD 32 billion (Office of the U.S. Trade Representative, 2012). This data shows that United States import from Saudi Arabia is almost double than its export to Saudi Arabia. America has trade deficit of USD 16 billion with Saudi Arabia (Office of the U.S. Trade Representative, 2012). In year 2011 the trade of America with Saudi Arabia increased to USD 61 billion. The import increased to USD 47, and trade deficit also reached USD 34 billion.
Saudi Arabia is the 25th largest export market for America. In year 2011 the export of goods to Saudi Arabia is increased by 20 percent (United States Census Bureau, 2012). For last three years, the business activities between both nations are increasing which shows that strengthening relationship. The top business categories are automobiles, machineries, electric equipments, medical instruments, and aircraft. United states also export agricultural goods to the Saudi Arabia which includes wheat, rice, vegetable oils, coarse grains, and dairy items. The America is also providing technical assistance to the Saudi Arabia by providing technology and professional help. Saudi Arabia is also supplying goods to the America. The major import items are mineral fuel, fertilizers, iron, steel, and organic chemicals. America also avails commercial services from Saudi Arabia.
Business Activities
Establishing a company in Saudi Arabia does not involve cumbersome processes. The kingdom liberalized its policies in order to attract foreign investors. The government established a legal process that needs to be followed by the companies wants to operate in the region. A foreign company can hold full ownership in the Saudi Arabia. According to a survey conducted by World Bank Saudi Arabia is 12th most desirable place to setup or expand the business (Ibpus, 2007). American companies are taking advantages of liberalized Arabic economy by tapping potential business opportunities. American companies operating in Saudi Arabia market provide its products or services by local establishments.
People in Saudi Arabia have good purchasing power that makes the place attractive for American companies. Some sectors in Saudi Arabia are lagging behind and have tremendous opportunities of the growth. United States of America is largest foreign investor in Saudi Arabia (Ibpus, 2007). American companies are successfully operating in different sectors such as education, real estate, infrastructure, finance, consumer goods, energy, environment, and ICT. The business relationship between Saudi Arabia and United States is expected to strengthen further in coming years as both nations are focusing on mutual welfare and development.
Conclusion
United States and Kingdom of Saudi Arabia have strong economic and business relationship. Saudi Arabia holds biggest reserves of oil and petroleum products which make kingdom largest supplier of oil to the America. America, on the other hand, provides advance technology, technical human resource, consumer goods, and military products to KSA. America has highest foreign investment in KSA which shows strong business trade between both nations. The business activities between KSA and USA are healthy and will increase at good rate in coming years.
References
Ibpus. (2007). Us Saudi Arabia Diplomatic and Political Cooperation Handbook. Washington, DC: Int'l Business Publications.
Office of the U.S. Trade Representative. (2012). Retrieved April 21, 2014, from http://www.ustr.gov: http://www.ustr.gov/countries-regions/europe-middle-east/middle-east/north-africa/saudi-arabia
U.S. Department of State. (2013, August 23). Retrieved April 22, 2014, from www.state.gov: http://www.state.gov/r/pa/ei/bgn/3584.htm
United States Census Bureau. (2012). Retrieved April 21, 2014, from www.census.gov: http://www.census.gov/foreign-trade/balance/c5170.html
