2015 Index of Economic Freedom

Saudi Arabia

overall score62.1
world rank77
Rule of Law

Property Rights40.0

Freedom From Corruption46.0

Limited Government

Government Spending61.9

Fiscal Freedom99.7

Regulatory Efficiency

Business Freedom65.8

Labor Freedom72.7

Monetary Freedom68.4

Open Markets

Trade Freedom76.4

Investment Freedom40.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 30.0 million
  • GDP (PPP):
    • $937.2 billion
    • 3.8% growth
    • 5.5% 5-year compound annual growth
    • $31,245 per capita
  • Unemployment:
    • 5.5%
  • Inflation (CPI):
    • 3.5%
  • FDI Inflow:
    • $9.3 billion
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Saudi Arabia’s economic freedom score is 62.1, making its economy the 77th freest in the 2015 Index. Its score is essentially unchanged since last year, with improvements in trade freedom and freedom from corruption offset by declines in labor freedom, business freedom, and the management of public spending. Saudi Arabia is ranked 8th out of 15 countries in the Middle East/North Africa region, and its overall score remains above the world average.

Only one of Saudi Arabia’s economic freedom scores has increased over the past five years. Since 2011, a drop of 4.1 points has been led by decreases in five of the 10 economic freedoms, with notable declines of 12 points in government spending and 20 points in business freedom. This has set Saudi Arabia’s economy apart from the economies of some of its more freedom-minded Persian Gulf neighbors.

These trends undermine an already uneven institutional and structural economic framework. Government spending and taxation remain relatively well-maintained, with oil profits contributing well over two-thirds of government revenues. However, the rule of law remains weakly enforced, and the judiciary is strongly influenced by the royal family. A closed economy and investment regime limit technology transfers and the investment needed for economic diversification.



Saudi Arabia is an absolute monarchy ruled by King Abdallah bin Abdul Aziz Al Saud. Pro-reform Arab Spring demonstrations in 2011 drew few crowds outside of eastern Saudi Arabia, where the Shia minority population is concentrated. Most of the Sunni majority appeared to be satisfied with increased economic handouts and the king’s promise of greater political participation. Saudi Arabia is the world’s largest oil exporter and dominates the Organization of Petroleum Exporting Countries. Oil revenues account for about 90 percent of export earnings and about 80 percent of government revenues. Saudi Arabia joined the World Trade Organization in 2005 as part of an effort to promote foreign investment and economic diversification.

Rule of LawView Methodology

Property Rights 40.0 Create a Graph using this measurement

Freedom From Corruption 46.0 Create a Graph using this measurement

The public is aware of schemes by which oil wealth is systematically appropriated by members of the royal family (e.g., payments to “facilitators,” which are often seen as required to conduct business). The slow and non-transparent judiciary is not independent and must coordinate its decisions with the executive branch. Laws protecting private property are subject to Islamic practices.

Limited GovernmentView Methodology

Saudi nationals and citizens of Gulf Cooperation Council countries pay no income taxes, but net worth is subject to a 2.5 percent religious tax. Foreigners pay income taxes, and non-Saudi companies pay a 20 percent corporate tax. Tax revenue equals 3.7 percent of domestic income, and public spending amounts to 35.7 percent of domestic output. Public debt equals approximately 3 percent of GDP.

Regulatory EfficiencyView Methodology

The regulatory framework is relatively sound. With no minimum capital required, starting a business takes nine procedures, but licensing requirements are time-consuming. There is no mandated minimum wage, but wage increases have exceeded labor productivity. Subsidies cover nearly 80 percent of the retail cost of electricity and fuel—one of the world’s biggest such schemes.

Open MarketsView Methodology

Saudi Arabia’s average tariff rate is 4.3 percent. Government procurement processes favor domestic businesses. Foreign investment in many sectors of the economy is restricted. The government retains considerable ownership in the financial sector, but licensing requirements for foreign investment have gradually been eased. Foreign financial firms have established a strong presence in the local investment banking and brokerage sector.

Country's Score Over Time

Bar Graph of Saudi Arabia Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
2United Arab Emirates72.41.0
8Saudi Arabia62.1-0.1

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