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Volume :16 Issue : 61 1990      Add To Cart                                                                    Download


Auther : Dr. Mohamed Osman Mostafa


The Assumption of the Research:

         The size and kind of the present financial crisis, from which the developing oil countries suffer, among which is the Kingdom of Saudi Arabia, is not only ascribed to the retreat of oil return in the 1980s, but also to another latent cause in the movement of the currents of currency flows.

         This cause is represented in the bulk currency flows that out-flow the country and their share in the absorption of a high ratio of the currency flows that inflow the country.  With this financial element of the crisis other skeletal elements are connected.  These elements are essentially connected with the process of employing the economic resources in economic activities and with unequal economic relations, local and international.

         If the years of the oil surge have relatively hidden the features of these financial and skeletal problems, the negative effects, resulted from the crisis of currency flows that outflow the country and its structural aspects have become keener and clearer in influencing economic activity especially with the ebb of the oil rise.

         The Objectives of the Research:

           The objectives of this research is to prove the above mentioned assumption and need for action to avoid the negative effects of the currency outflows.

        The Methodological Steps of the Research:

 1.     Estimation of currency flows that outflow and inflow the country related to the Saudi economy and the economy of the foreign world.

2.     A study of the effect of the currency flows which outflow the country on the total local product and the national product.

3.     Its effect both on the process of saving and investment (the process of Capital Accumulation).

4.     Its effect on the international liquidity.

5.     Its effect on the changes on local liquidity (the means of payment).


         The period of Research: 1976 – 1985


The Most Significant Results of the Research:

 1.     Currency flows that outflow the country absorb a high ration of the bulk of incoming flows to the Kingdom: the ratio reached to about 89%, distributed as follows:

   35% for imported goods.

   54% for services and transferences.

 2.     The money, which is transferred from the Kingdom for service and transferences, is equal to half the money obtained from oil exportation.

 3.     As a result of the constant indebted balance for services and transferences, the total national product has become less than the total local product of a ratio of 25%.

 4.     The increase in the rate of the foreign absorption of saving during the years of oil slump resulted in the stopping of investment growth.

 5.     Foreign commitments have increased as a result of the insolvency of balance of payment.  This caused the absorption of half of the total foreign currency within five years (1981 – 1985); it was decreased from $28 billion to $13.7 billion.

 6.     Its clear that there is a keen retreat in the rate of change addition in the means of local payment (local liquidity).



           Solution does not lie only in the return of oil return to a better position, but it also requires necessary skeletal and financial corrections, which lead to curbing the currency flows that outflow the country.

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Dec 26, 2021

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