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June 26, 2018

Allowing women to drive could add $90 billion to Saudi Arabia’s economy

Allowing women to drive could add $90 billion to Saudi Arabia’s economy

Saudi Arabia’s decision to allow women to drive as of last Sunday is predicted to add $90 billion to the Kingdom’s economy by 2030.

“Lifting the ban on driving is likely to increase the number of women seeking jobs, boosting the size of the workforce and lifting overall incomes and output,” says Ziad Daoud, a Dubai-based economist for Bloomberg Economics.

Vision 2030 is a development plan spearheaded by Muhammad bin Salman, the crown prince of Saudi Arabia. The grand vision is to transform the Saudi economy from one of oil dependence to a post-oil economy, where actual production and value creation is the economic basis for society.

Women play an important role in Vision 2030. In general, Saudi women are slightly better educated than men yet only one in five Saudis employed in Saudi Arabia are women. The government believes women can play an active role in developing the country. Women may also be less reluctant than their male counterparts to take over some of the jobs—such as nurses or other service related jobs—today held by migrants.

“Women’s labor market activity makes women and girls more economically valuable to their families and to society,” writes Anne E. Winkler in Women’s labor force participation. “Given societal benefits such as greater economic growth, governments have a compelling interest to undertake policies to encourage women’s labor force participation.”

Part of the reason for women’s absence from the Saudi workforce is lack of access to transport. The country’s hot climate makes it difficult to be outside in the sun. Cities are designed with long distances between home, work, services, and shopping, therefore, the possibilities of women walking or cycling to work are very limited.

This also impacts how efficient men can be at work. Under the driving ban women had to be driven by a male relative, or if the family can afford it, by a driver.

Husbands without drivers are obliged to leave work to drive their wives if they need to go to the dentist, doctor, or attend other appointments deemed important.

Lifting the driving ban will make Saudi Arabia’s economy more efficient in the long term. As well as bringing more educated women into the workforce, it could potentially enable men and women to occupy the same spaces and work together in the workforce.

Bloomberg estimates that allowing Saudi women to drive could help the Kingdom reap as much income as selling shares in Saudi Aramco.