The Kingdom of Saudi Arabia was founded in 1932 by Ibn Saud. The country has since been an absolute monarchy governed along Islamic lines. The Qur’an is declared to be the constitution of the country, which is governed on the basis of Islamic law (Shari'a). Saudi Arabia’s economy is a command economy. A system where the government, rather than the free market, determines what goods should be produced, how much should be produced and the price at which the goods will be offered for sale. The command economy is a key feature of any communist society. Also known as a planned economy, command economies are unable to efficiently allocate goods because of the knowledge problem - the central planner's inability to discern how much of a good …show more content…
A free market economy is a market economy based on supply and demand with little or no government control. A completely free market is an idealized form of a market economy where buyers and sellers are allowed to transact freely (i.e. buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes, subsidies or regulation. So, what if Saudi Arabia’s was a democratic free-market economy? First of all, the KSA needs a firm legal framework in order to function adequately. Private property should be guaranteed as well as freedom of trade, freedom of price formation, free movement of capital and labor. Private contracts must be enforced by law, rules of bankruptcy established. From the start of the transition on there must be laws against monopolization and collusion and these laws - as all others - must be enforced. This is of great importance especially at the beginning when public property is privatized. Thus all constitutional and legal regulations should be directed to promote growth and investment. When there exists an austere legal framework, curbing corruption will become much