The rise of consumerism in Saudi Arabian society

32 Pages·2007·0.15 MB·English

The rise of consumerism The rise of
consumerism
in Saudi Arabian society
Soraya W. Assad
Department of Sociology, King Abdulaziz University, Jeddah, Saudi Arabia 73
Abstract
Purpose–The emergence of consumer-oriented societies has become the central trait of our era.
Saudi Arabia gained entre´e to consumerism via its oil wealth. Numerous studies demonstrate that
consumerlifestyleandconsumeristattitudesarespreadinginthecountry.Thepurposeofthisstudyis
to explain how Saudi Arabia came to be a consumer society, to present evidence of rampant
consumption, and to describe how global and local economic, social, and governmental factors
colludedtoreinforcethisculturaltrend.
Design/methodology/approach–This study is based on the survey and analysis of secondary
datagatheredfrompublishedstudiesandreportsavailableinEnglishandinArabic.
Findings–ThestudyshowsthatthespreadofconsumerisminSaudiArabiaisaconsequenceof
acomplexofglobalandlocalfactors.Commercialtelevisionandtheinternet,marketingstrategies,
relentless and manipulative advertising, urbanization, and proliferating shopping centers, are all
componentsofglobalizationpromotingemulationoftheWesternconsumerismlifestyle.Thenational
governmentsubsidiesandgive-awaysduringtheoilboomyearsduetoincreasednationalincome,
absence of taxes, public job availability, emerging middle class, liberal import policies, increased
female participation in family purchase decisions, a burgeoning youth market, and increased per
capitaincomehavealsoenabledSaudiArabia’stransformationintoaconsumersociety.Inaddition,
statistics presented for a variety of durable and nondurable goods and services amply testify to
rampantSaudiconsumerism.
Originality/value–Excessive consumption in Saudi Arabia is a threat to the social order. It is
exacerbatingeconomic,environmental,social,psychological,andhealthproblems.AsSaudiArabia
seekssustainabledevelopment,moreresearchisneededtoidentifyandaddressproblematicaspectsof
consumption.Aspartofthisprocess,policymakersshoulddistinguishwhatconstitutesconsumerism
fromhealthyconsumptionpatterns.Excessiveconsumptionshouldbeminimizedasawaytoavoid
economicminefieldsandsustaineconomicgrowth.
KeywordsConsumption,Consumerism,PersianGulfStates,SaudiArabia
PapertypeResearchpaper
Introduction
In twentieth century capitalism, the focus shifted increasingly from production to
consumption, resulting in a parallel shift from control and exploitation of workers
to control and exploitation of consumers. Capitalism has created a controllable
“consuming mass” to complement the control of the “producing mass.” The central
concern is to concentrate the means of consumption on the control of consumers in
ordertogetthemtospendasmuchaspossible(Gane,1991;Schor,1998;Ritzer,2001).
The emergence of consumer-oriented societies has become the central trait of our
era. In such societies, sustaining a productive economy demands that consumption
InternationalJournalofCommerce
becomes a way of life, and buying and use of goods converts from utilitarian to andManagement
ritualistic excess. The consumer society had already expanded from the USA to Vol.17No.1/2,2007
pp.73-104
Western Europe and Japan by the 1960s. The 1980s were a decade of marked qEmeraldGroupPublishingLimited
1056-9219
extravagance in all these regions. Laissez-faire economic policies and newly
DOI10.1108/10569210710774767
IJCOMA internationalized stock and bond markets created easy-money euphoria among the
17,1/2 well-to-do (Durning,1992, p. 33).
ThelifestyleofthemajorityofAmericansandofthosearoundtheworld,whocan
affordtoemulateit,isthelifestyleofaconsumerclass.Withthegrowthofthisclass
camethespreadofconsumerism.Itisaculturalorientationthatperceivesthepossession
and use of a variety of goods and services as the path to personal happiness, social
74 status,andsuccess.Consumptiontendenciescompriseasetofpracticeswhichpermit
peopletoexpressself-identity,showattachmenttosocialgroups,accumulateresources,
exhibit social distinction, and ensure participation in social activities. Buying things
becomesbothaproofofself-esteemandameanstosocialacceptanceviawhatVeblen
termed“pecuniarydecency”(Durning,1992,p.40).
Consumerism has already spread to Arab countries and in particular to the Gulf
states(Abdu,1992,pp.60,62;ZaidandAbu-Elenin,1995,p.5).WithinArabsocieties,the
lower middle-income class is emulating the lifestyle of the upper-and middle-income
classesintermsoftheirconsumptionbehavior.Arabconspicuousconsumptionbeganin
theGulfcountries,fromwhichitspreadviaArabexpatriates,andintellectualswhohad
worked in the Gulf states. Today, it is generally agreed that the Gulf countries are
consumer societies (Al-Shouki, 1989; Al-Abadi, 1990; Al-Nouri, 1990; Abdu, 1992;
AL-Qudsi,1992;ZaidandAbu-Elenin,1995;Al-Motwa,1996;Al-Saif,2002).
Until the discovery of its vast oil resources in 1938, the economy of Saudi Arabia
wasbasedonsubsistencearid-zoneagricultureanddesertpastoralism.Presently,the
economy is dominated by the oil industry. Large-scale oil production increased
the national income exponentially, enabling expanded access to imported goods with
the rise of individual incomes and the ability to consume. Since, 1970, development
plans in Saudi Arabia have encouraged this trend, aiming to raise the standard of
livingoftheSaudiindividualbyraisinghis/herincome.Severalstudies(Shukri,1981;
Al-Gamdi, 1988; Abd-Elal, 1995; Al-Shanbary, 1998; Al-Saif, 2002) agree that the
spread of a consumer lifestyle and consumerist attitudes in Saudi Arabia is
increasinglyevident.AccordingtoAl-khateeb(1998,p.172),Saudisocietyhasbecome
oneofthemostconsumer-orientedsocietiesintheworld.Allfamilymembers – men,
women,and children – are encouraged to become consumers.
AsSaudiArabiaseekssustainabledevelopment,itisimportanttounderstandand
analyzethefactorsthatcolludedtoreinforcethecurrentconsumptionorientationinthe
country. Because Saudi Arabia plays an important role in the global community and
themajorityofitspopulationisinvolvedinconsumptionandleisurerelated-activities,
studying their consumption patterns and behavior becomes important for
policy-makers, multinational corporations, and researchers. The purpose of this
study is to explain how Saudi Arabia came to be a consumer society, to present
evidence of excessive consumption, and to describe how global and local economic,
social,and governmental factors colluded to reinforce this cultural trend.
Factorspromoting consumption
It has long been recognized that the aggregate behavior of consumers can be
understood as the result of economic and social psychological forces. Consumer
behavior is part of a larger process of interaction among consumers, advertising
agencies, mass media, and other institutions, which are all functionally related to
each other. Research on consumption behavior is incomplete without some effort
to understand the nature of these functional relationships (Glock and Nicosia, 1964, The rise of
p. 54). Consumption behavior is also central to understanding the structure and consumerism
functioning of societies.
ThegrowinginfluencesofthemultinationalcorporationsthatdistributeAmerican
products,theworldwideriseofapopularmediaandelectroniccommunicationssystem
andworldwidetrendsininequalitysuggestthatconsumerismhasspreadbeyondthe
shoresoftheUSA(Schor,1999,p.47).TheArabGulfcountriesareamongthosewhich 75
have attracted Western marketers’ array of goods promoting conspicuous
consumption. The spread of consumerism in Saudi Arabia is a consequence of
acomplexofglobalandlocaleconomic,social,andgovernmentalfactors.Commercial
television and the internet, marketing strategies, relentless and manipulative
advertising, urbanization, and proliferating shopping centers, are all components of
globalizationpromotingemulationoftheWesternconsumerismlifestyle.Thenational
government subsidies and giveaways during the oil boom years due to increased
national income, absence of taxes, public job availability, emerging middle class,
liberal import policies, increased female participation in family purchase decisions,
a burgeoning youth market, and increased per capita income have also enabled
SaudiArabia’s transformation intoa consumer society.
Globalfactors
EmulationofWesternlifestyles.Veblen(1987,p.103)consideredmuchofconsumption
behavior to be driven by emulation, the stimulus of an invidious comparison
motivatingpeopletoseektooutdo thosewithwhomtheyareinthehabitofclassing
themselves. Emulation leads to discrimination in favor of visible consumption.
That is, the goods people purchase to impress others must be visible to those with
whom they compare themselves. According to Veblen, consumption also requires
a conspicuous waste of goods. That is, consumption must convey economic
extravagancein excess ofwhatisrequired forphysicalcomfort (Olson,1998,p.192).
For Veblen, conspicuously wasteful consumption expressed a desire to live up to the
conventional standard of good taste asdefined by the wealthy leisure class.
As we enter the twenty-first century, emulation continues to govern consumer
behavior. However, emulation has evolved to reflect a new global order in which the
industrializedcountriesoftheWesthavereplacedVeblen’snineteenthcenturyleisure
class in setting the standards of good taste for the rest of the world. Emulation can
beunderstoodasaglobalprocessinwhichcountriescompeteforeconomicstatusand
esteem. The highest status is accorded to “developed” nations such as the USA and
WesternEurope,amongothers.Thesecountriesareconsideredsuperioranddominant
technologically, economically, and militarily. Consequently, they set the standards
and norms by which all other countries are judged backward, inferior, different,
deviant, or subordinate. Because of this supremacy, many people around the world
attempt to emulate Western consumption patterns (Olson, 1998, pp. 191-2). However,
emulationoftheWestismostapparentinthenationsthathavetheabilitytopayfor
Westerngoods.NationssuchastheGulfstatesareabletodemonstratetheirpecuniary
prowessin the most conspicuous and wasteful ways.
Inaquestforglobalstatus,SaudiArabiaisstrivingtowardmodernization.Since,
modernization has been equated with westernization, there has been a tendency to
adopt Western models of development, in particular in the case of the country’s
IJCOMA infrastructure projects. Saudi Arabia is dependent on imports of Western goods and
17,1/2 services. It relies on industrialized nations of the first world for food, manufactured
goods,andarms.ThereisdependencyonWesterntechnologyandknow-how.Atthe
individual level, becoming modern is assumed to be related to the acquisition and
consumption of certain status goods and a preference for the Western lifestyle. As a
result of travel, mixed marriages, foreign expatriate importation, and Western
76 education, the Saudi upper-middle and upper classes have acquired a taste for
Westernfashions,luxuries,andsuperfluousgoods.Purchasinggoodsassociatedwith
Western middle- and upper-class lifestyles, young people dress in the latest Western
fashions, use Western brand-name fragrances, eat at Western fast-food outlets and
restaurants,andlistentoWesternmusicasamarkofsocialstatus.Thedesiretohave
aEuropean-madecarandEuropean-designedclothesreflectsaculturalpreferencefor
Western standards of taste. Furniture has become more westernized, imported from
differentpartsoftheWesternworld.Privatemotorvehicleshavebecomeincreasingly
common even in rural villages. Expenditures on expensive consumer goods such as
computers,mobilephones,andotherimportantmarkersofsocialstatusareregarded
as indispensable. More household appliances are acquired and used by the Saudi
family. Most Saudi homes now have ovens, washing machines, refrigerators, electric
heaters,and air-conditioners (Al-Khateeb, 1998, p. 172).
Emulationbythe“newrich”takestheformofincreasinglywastefulexpenditures:
luxury homes with swimming pools, increased expenditures on leisure, taking
vacations abroad, buying residences abroad, and purchasing jewelry. But as Veblen
pointed out, the conventional standard defined by the wealthy is “indefinitely”
extensible.Asthe“pecuniaryability”ofthelowerclassesincreases,thescaleofdecent
consumptionexpands.Tomaintaintheirrelativepositionwithinthesocialhierarchy,
membersoftheleisureclassorhighstatusgroupsareforcedtoincreasetheirlevelof
consumption. In the process, the pecuniary canons of good taste and standards of
reputableliving areredefined for those below (Olson,1998, p. 191).
Traditionally strong group ties in Saudi Arabia encourage people to imitate their
relatives,friends,andneighbors,whoalsotelleachotheraboutnewproducts,thereby
reinforcingadvertisers’marketingefforts(Al-Shanbary,1998,p.57).Toenhancetheir
socialstatusandliveuptothestereotypicalsocialexpectationthatSaudisarerichand
should behave accordingly, some Saudis spend morethan they can afford.
ThetendencytoconformtoWesternstandardsandconsumercultureisevidentin
the proliferation in Saudi Arabia of department stores, shopping malls, fast-foods
outlets and convenience stores such as 7-11, all of which are replacing local markets
andstreetstalls.Inshort,whattheWestexportstotheSaudisisthetasteforaWestern
lifestyle. Creating a global economy means transforming the vast majority of largely
self-sufficientpeoplelivingin“underdeveloped”countriesintoconsumersofWestern
goods provided by transnational corporations. As the president of the Nabisco
Corporation put it, “I am looking forward to the day when Arabs and Americans,
Latin and Scandinavians will be munching Ritz crackers as enthusiastically as they
already drink Cokeorbrush theirteeth with Colgate” (Mander,1996, p. 321).
Mediaexposure.Thecultivationofneedsisamammothglobalenterprise.Forfour
decades, advertising has been one of the world’s fastest-growing industries.
In developing countries, advertising has exploded (Durning, 1992, p. 120). Global
advertising agencies have become the most powerful and influential teachers of the
next generation (Olson, 1998, p. 192). Advertising translates mass production into The rise of
mass consumption. consumerism
Ascommercialtelevisionhasrapidlyadvancedaroundtheworld,everywhereithas
proved exceptionally effective at stimulating buying urges. Aside from sleeping and
working, watching TV is the leading activity in most consumer societies (Durning,
1992, pp. 125-6). In addition to carrying many commercial messages, television
programmingreinforces consumeristvalues. 77
Television aims to make as many people as possible compulsive and impulsive
consumers, which is to say addicts, by daily bombarding them with advertising
(Orr,1999,p.142).Seductiveadvertisingmakespeoplebelievethatwhotheyareand
what they own areoneandthesame.Socializing with family, friends, and neighbors
hasbeenreplacedbyhoursspentinfrontofthetelevisionset,whichpresentsaskewed
picture of spending patterns.
Another risk of commercial TV is that it homogenizes human cultures, leading to
a loss of healthy diversity and to a weakening of attachments to local places.
Itpromotesworldwideuniformityinconsumertastes.WiththeadventofTV,people
havelostinterestinnativestoriesandlegends.Whereasoncecooperation,sharing,and
nonmaterialism were valued, TV always seems to present values opposite to these
(Durning, 1992, pp. 127-8).
Omar (2000, p. 89) points out that advertising has played an important role in
spreadingconsumerisminArabcountriesasaresultofsatelliteTVandanopentrade
market.ZaidandAbu-Elenin(1995,p.17),Obid(1997,p.171),andAl-Rahmani(1999,
p. 42) have all indicated that advertising has been important in changing people’s
tastes and has been effective in spreading consumerism in third-world and Arabian
Gulf countries, particularly the United Arab Emirates (UAE) and Saudi Arabia.
Previous research has indicated that most advertising in the UAE was a product of
Western multinational corporations, which attempted to formulate one pattern of
consumption.
Furthermore, in the Gulf countries, advertising has been increasing. Al-Rahmani
(1999, p. 43) indicates that, particularly in recent years, total expenditures on
advertisingintheGulfhavegrownasaresultofthespreadofsatellitechannels.Ithas
been estimated that between 1995 and 1996, advertising expenditures in the Gulf
countries increased by 20 percent, from 750.7 million dollars to 902.4 million dollars.
They are expected to increase to more than a billion dollars in the near future
(Middle East Newspaper,1997).
SaudiArabiahadbecomefarmoreexposedtotheworld’smediabythelate1950s.
Thecountryhadover6milliontelevisionsetsin1999andover260televisionsetsper
1,000peoplein2000.MosteducatedSaudisnowhavesatellitedishes.Over95percent
oftheSaudipeoplehaveexposuretoradio.TheSaudigovernmentestimatesthatthe
averageSaudispent50-100percentmoretimewatchingtelevisionin2000thanhisor
her US orEuropean counterpart (Cordesman, 2003, pp. 12, 234).
TopenetratetheprofitableSaudimarket,moreandmorecompanieshaveturnedto
advertising. According to industry estimates, advertising expenditures in Saudi
Arabiahadmorethandoubledbefore1990andtheKingdom,alongwithotherArabian
Gulfcountries,accountedfor75percentoftheArabicadvertisementindustry’ssalesat
that time (Okaz Newspaper, 1990). While outdoor and print media have traditionally
been the major advertising media in the Kingdom, television has been making
IJCOMA significant inroads. Twenty years ago Lavell (1987) was already citing TV as the
17,1/2 fastestgrowing advertising medium in thecountry.
Awad(1994,p.187)indicatedthat90percentoftheadvertisingonthethreeArabian
TV channels (Saudi Arabia, MBC, and Dubai) was for foreign durable and luxury
goods. ThesegoodswereJapanese,American,andEuropean,andmostofthemwere
the products of multinational corporations.
78 Omasha (2003) studied the effects of such advertising on Saudi women, who
remembered, preferred, and purchased certain advertised brand-name foodstuffs.
In Saudi Arabia, television advertising has also been ranked as a main source of
information and influence on family purchasing behaviour, particularly among
children(Al-Saud, 1997).
According to Al-Hedithi’s (2000) study, 93 percent of Saudi children watched
televisiondailyorregularly.Hedemonstratedthatchildrenrememberedthetelevision
advertisementstheysawandthatthesehadastrongimpactonpurchasingbehaviour,
stimulating the buying urge, providing information, and affecting selection of
products. He found that 26.25 percent of children bought the goods they saw on
television advertisements. Al-Anad (1993) found that the majority of the children in
Riyadh, Saudi Arabia watched television almost three hours daily, asked to buy
products advertised on television, and consumed a large number of these products.
Al-Harthi(1994)foundthat97.4percentofelementaryschoolstudentsinSaudiArabia
watched television, 76.2 percent watched television daily, 93.3 percent watched
commercials, 70.5 percent knew commercials’ broadcasting times, and 90.4 percent
liked to watch commercials. He also found that a large percentage of the children
remembered what theywatched.
Yavas and Abdul-Gader’s (1993, p. 38) study also sought to determine Saudi
children’sexposuretoandawarenessofcommercials.Theyfoundthatduringatypical
evening, regardless of their gender, 13.4 percent of the respondents were exposed to
one commercial break, 31.5 percent to two, 15.3 percent to three, and 39.8 percent
tofour.Thecommercialsgeneratingmostviewerawarenesswerethoseforfood,soft
drinks, toys, and automobiles. The authors concluded that commercials did strongly
influence children’s requests to parents and influence family purchases. In fact,
32percentofthechildren“always”and46percent“sometimes”askedtheirparentsto
purchasetheadvertisedproducts.GiventhestrongfamilyorientationintheKingdom,
not surprisingly, 44 percent of the parents “always” and 45 percent “sometimes”
consentedtotheserequestsandboughttheproductsthechildrenrequested.Itshould
benotedthatabout70percentofthechildrenaccompaniedtheirparentsonshopping
trips, and an overwhelming proportion could identify the advertised brands during
these trips.
A survey of Saudi college students also found that they ranked television as the
most important mass media information source (Quraeshi et al., 1991). No wonder
Al-Hedithi (2000) found television advertisement the second most important
information source about a product while Al-Saud (1997), studying the impact of
television advertisements on Saudi family purchasing behavior, found that the most
important goods andproduct information sourceswere, in turn:
. televisionadvertisements;
. personal shopping experience;
. newspaper advertisements; and The rise of
. family and friends. consumerism
Electronicconsumptionfacilitators.Thelatestelectronicmeansofconsumptionhaving
a profound effect on consumer behavior include home shopping television and
seemingly infinite sites on the internet. These are revolutionizing consumption of all
sortsofthingsincludingbooks,toys,clothing,automobiles,stocks,andairlinetickets. 79
The credit card has given the consumer society an enormous boost. Consumption of
certain goods and services would have not occurred had the credit card not been
availabletoenablepeopletospendallthattheyhaveandthentogowellbeyondthat
amount using their credit cards. Instead of shopping only during a store’s business
hours,peoplecanorderproductsatanytimeofthedayornightthroughcatalogs,the
internet, or television shopping networks and charge the purchases to their credit
cards.Relatedphenomena – debitcards,ATMs,andelectronicfundstransfers – also
helptofeedtheconsumption-orientedsociety(Ritzer,2001,pp.100,102).SaudiArabia
has entered the electronic age, and credit card use is becoming common.
Commercializationofpublicspaces.Integrationintotheglobaleconomyisnotnew
for the oil-rich countries of the Arabian Peninsula and Gulf, insofar as their modern
developmenthasbeendependentontradefordecades(Doumato,2003,p.50).However,
the last 25 years have witnessed Western consumer trends flooding Arabian Gulf
markets.IfonesinglethingrepresentsthewayGulfconsumerpatternshavechanged,
itistheretailrevolutionthere.Thelast25yearshavewitnessedanunparalleledboom
in supermarkets, hypermarkets, and gleaming air-conditioned shopping malls. It is
obvious that Western convenience shopping is increasingly popular with European
expatriate, Arab, and Asian shoppers.
Ritzer et al. (2001, pp. 421-2) rightly indicate that technological changes made the
newsitesofconsumption(departmentstores,malls)possibleandhelpedtomakethem
more fabulous. Art and technology produced fantastic dream worlds, oriented to
entertain the consumer in order to increase consumption and designed to provide
goods and services to fulfill the needs of consumers’ imaginations. These sites offer
hopetothemassesviainexpensiveimitationsandcreditsothatlackofresourceswill
notpreventconsumption.Fromfragrancestothelatestcomputertechnologyandfrom
mobile phones to themed restaurants, young Gulf Arabs can buy or visit a wide
selectionof foreignbrands at alocal mall.
The consumer revolution has spread beyond the weekly shop: even the most
humble Gulf city is now awash with foreign-branded burger bars, ice-cream stores,
fashion boutiques, and themed restaurants that operate either with local partners or
through regional franchise deals. Fast-food firms say that their market has already
peakedinallbutafewunderdevelopedregions.NewForeignbrandsflockedintothe
Gulf until the mid-1990s, but now the name of the game is market share rather than
market entry. Even before low oil prices started to bite, price wars and takeovers of
small, weak fast-food chains by stronger rivals had become the norm in the regional
fast-foodtrade (Thomas, 1999, p. 10).
Market liberalization. Globalization laissez-faire economic policies and
internationalized stock and bond markets have created an easy-money euphoria
amongthewell-to-do,whichtranslatesintoa“getitwhileyoucan”mentality.Market
liberalizationandtheintroductionofbuyingoncredithaveledtoexplosivegrowthin
IJCOMA salesofeverythingfromautomobilesandtelevisionstofrozendinners(Durning,1992,
17,1/2 p. 33). As previously noted, the spread of the credit card industry has encouraged
consumers to spend money,in many casesfar beyond their means.
Marketing strategy advances. Companies are using effective marketing techniques
to influence both affective and cognitive dimensions of individual purchasing
behavior. Marketers use such incentives as increased warranty periods, rewarding
80 customers with premiums and free gifts, and extensive use of games of chance and
contestsaspartoftheirsalespromotionprograms.Otherpromotionaldevicesinclude
discountsonlargepurchasesandtheuseoflocalnewspaperstoadvertisethese.Halfor
full-page advertisements contain culturally relevant messages. In addition, extensive
use is made of available outdoor advertising sources – lamp post signs, stadium
panels, uni-pole billboards, and bus stop posters (Tunclap, 1993, p. 38). Some
restaurantsandstoresinSaudiArabiamakespecialefforttomakewomencomfortable
in public. Restaurants are obliged to provide separate seating areas for women and
families.Afewwomen’sclothingboutiquesareownedandrunexclusivelybywomen,
and only womenare allowedinside.
Urbanization. As in other countries, Saudi Arabia is going through the process of
urbanization; its population is becoming increasingly urban. The rapidity of the
changeintheSaudicaseisstartling.AccordingtoWilsonandGraham(1994,p.235),in
1902,lessthan10percentoftheKingdom’sinhabitantslivedincities.Oilrevenuesled
to increased expenditures, which in turned spurred the urban economy. Trade and
construction jobs were initially created, attracting tribesmen. Whereas 30 percent of
the Kingdom’s population was said to be urban by 1960, this had increased to
75 percent by 1990, a proportion far outstripping that in such neighbors as Iraq and
Iran,althoughstillthelowestamongthesixmembersoftheGulfCooperationCouncil
(GCC). The Kingdom’s urbanpopulation was also increasingly concentrated. Riyadh,
Jeddah,andMakkahcontainedmorethanhalfofthecountry’surbanpopulationasof
1990. A United Nations Development Report of 1999 indicated that more than
80 percent of the population of the Gulf statescould be called city dwellers. In Saudi
Arabia,forexample,84percentwerecitydwellers(Barakat,2000,p.49).MostSaudis
prefercitylifetoday.Despiteeffortsbythegovernmenttostemtheflowtothecitiesby
improvingruralservicesandprovidingfarmingsubsidies,tremendousgapsbetween
city and rural liferemain (Wilsonand Graham,1994, p. 235).
Studies in the Arab countries have indicated that immigration from rural to
urban areas has increased consumption expenditures (Al-Shanbary, 1998, p. 61;
Obid, 1997, pp. 77, 89, 91). People in urban areas consume more than in rural
areas as demands increase for housing, water, electricity, transportation, food, and
education.
InSaudiArabia,urbanizationhasencouragedmanyyouthstomovefromruraland
Bedouinareastourbanareasinsearchofjobsandbetterservices.First,theseyouths
movealone,butaftersettlingdown,theybringtheirfamiliestothecity.Youngcouples
preferto setuptheir ownhouseholds,formingnuclearfamilies.Ifthey cannotafford
a separate home, they live with either set of in laws until they can build their own
(Al-Khateeb, 1998, p. 173). The rise of the nuclear family has affected consumption
patterns. The young married couple living independently starts to spend
independently on food, furniture, home appliances, water, electricity, gas, other
utilities,anddomestic help.
Localfactors The rise of
Government subsidies and giveaways. Since, the oil boom of the late 1970s and early consumerism
1980s,SaudiArabiahasundergonerapidandcontinuouseconomic,social,andcultural
transformationfromitstribalbeginnings.TheKingdomderivesaround75percentof
governmentrevenuefromtheoilsector.TheoilwealththatSaudiArabiaobtainedin
1974ledthegovernmenttoestablishmanysubsidies.Withtheinflowofpetrodollars,
infrastructure projects were stressed; the government also laid the foundations for a 81
welfare state. Education and health care were made free, and students were given
grants to attend school.
Duringtheboomyears,foodpricesforbread,rice,cookingoil,sugar,andmeatwere
subsidized. The Kingdom also subsidized low-cost utilities. Consumers were charged
only eight cents per cubic meter for the water coming from the country’s new
desalinization plants even though the cost to the government was $1.20 (Wilson and
Graham, 1994, p. 177). Similar subsidies were implemented for electricity, gasoline,
cookinggas,telecommunications,andairtravel.Thegovernmentalsocreatedseveral
direct and indirect subsidies for Saudi businesses through offsets, tariffs, and
investment and partnership arrangements. Subsides have had unintended results.
Given the low prices of many goods during the late 1970s and early 1980s, many
Saudis suffered no qualms about wasting previously expensive goods. Water
consumption is one example: Saudi city dwellers used more than 500 liters per day,
roughly 10-20 times the average of their rural Arab brethren (Beaumont, 1977,
pp. 42-60). By 1983-1984, direct subsidies accounted for 14.7 percent of the Saudi
budget according to a 1985 US Embassy subsidy study (Wilson and Graham, 1994,
p. 179).
Another stratagem for the distribution of oil wealth was through real estate. Real
estate prices soared; in some instances, land prices doubled every week (Lacy, 1981,
p.422).Therealestateboomcreatedscoresofmillionairesandfueledamassivebinge
of consumer spending.
In1992,inadditiontoloweringthepricesforgasoline,water,electricity,andbottled
gas, lower port fees were provided, which reduced the price of imports and was
expectedtoaddonebilliondollarstothepocketsofconsumers (WilsonandGraham,
1994, p. 190).
During the 1996-2001 periods, massive swings occurred in annual oil prices and
revenues. The value of Saudi oil and petroleum-related exports dropped in late 1997,
thenrosein1999,leapedin2000,anddroppedagainin2001(Cordesman,2003,p.24).
Asaresultoftheseswingsinoilrevenues,thegovernmentcutbackonsubsidies.For
example,duringtheoilcrashof1997,statesubsidieswerereducedongasoline,diesel
fuel, water, electricity, and air travel. Despite these cuts, however, these goods and
services remained underpriced. Suspended subsidies were reintroduced when oil
revenuesonceagainrose.Forexample,atacostofaround4billionriyals($1.1billion)
a year, the government reintroduced the barley subsidies in mid-2000 that it had
suspended in 1998 (Bourland, 2001, pp. 7-88). Government aid also encouraged the
excessiveuseofwaterbyprovidingfreedeepwellsandlow-costdieselfuelforpumps.
The subsidies for electricity, fuel, and petroleum products alone costthe government
anestimated$2.7billionin1997atworldmarketprices.Dieselfuel,forexample,sold
for8.59centspergalloninSaudiArabiaalthoughitcost12centspergallontoproduce
(Middle East Economic Digest,1995, pp. 32-33).
IJCOMA Public job availability. During the boom years, oil revenues not only allowed the
17,1/2 governmenttooffermassivesubsidies,butalsoenabledittocreatethousandsofjobs
initsownbureaucracy,therebyincreasing consumerpurchasingpower.TobeSaudi
meant to be assured of a job, but not just any job. White-collar jobs that indicate
educationandresponsibilityhaveahighsocialcachetinSaudiArabia.Evenintimes
of increasing economic uncertainty, there are clearly jobs that young Saudis cannot
82 imagine doing (Wilson and Graham, 1994, p. 179). By 2000, 40 percent of the labor
force – almost all Saudis – worked in government office jobs. As for the rest of the
Saudilaborforce,some25percentworkedinindustryandoil,and30percentworked
inservices.LittleoftheSaudiportionofthisworkforcedidmanufacturingormanual
labor (Cordesman, 2003, p. 7).
Emergingmiddleclass.TheSaudigovernment’seducationalsubsidiesanddemand
for white-collar workers to support national development goals have had the
predictableeffectofproducingamoreeducated,professionallyandtechnicallyskilled
population sector which constitutes an emerging middle class. The rise of a
middle-class population with some surplus income has enabled Saudi Arabia’s
transformation into a consumer society. As research by Abd-Elal (1995, p. 131) and
Sager (2004, p. 303)hasconfirmed, inSaudiArabiaaseducational level increases,so
doesconsumption.TheoftenWestern-educatedprofessionalandtechnicalworkersof
the middle class are those most likely to espouse the Western values of success,
achievement, and consumptionas an indicator of these.
Liberalimportpolicies.Saudiconsumptionhasbeenfacilitatedbyallowingimport
ofadazzlingarrayofluxurygoodsthatonlyafewcanafford.Anemergingbreedof
Saudis began to consume conspicuously. Their behavior took hold among an
increasing number of Saudis. This, in turn, stimulated the state to import more
consumer goods to satisfy these consumers’ insatiable appetites. In addition, in
January 2003, the 12 percent tariff on most goods imported into the Kingdom was
reduced to 5 percent, following a decision taken in December 2001. Basic food items,
other essentials (including many medicines), and capital equipment for development
projects continue to be imported free of any tariff (The Economist Intelligence Unit,
2004, p. 59).
Increased female participation in family purchase decisions. A number of authors
have noted that Saudi women’s influence on family purchase decisions is rapidly
increasing(Al-Torki, 1977; Al-Khateeb, 1987, 1998; Alireza, 1987; Jewell,1987;Yavas
and Babakus, 1994, 1995; Sager, 2004).
In their study of Saudi couples’ purchase decisions, Yavas and Babakus (1994,
pp.80,83)foundthatthehusbandalone made 26percentofthesedecisions,thewife
alonemade30percent,andthejointlycouplemadeabout44percent.Whilehusbands
dominatedingeneralonthequestionofhowmuchtospend,thisdidnotholdtruein
the case of women’s clothing. Similarly, on the question of where to buy, husbands
dominated except in the cases of furniture andwomen’sclothing.
YavasandBabakus(1994,pp.80,83)alsofoundasignificantpositiverelationship
between Saudi wives’ employment and educational status and how dominant they
were in purchase decisions. Education and female employment have given Saudi
women more power generally in family decision making, particularly in the
upper-middle and upper classes. Men’s increasing interest in their businesses gives
them less time to spend with their families, leaving household and childrearing