Exploring the Dynamics of Saudi Arabia’s Economic System

Saudi Arabia's economic system is a mixed economy combining market and state roles, heavily dependent on oil while Vision 2030 pushes tourism, entertainment, and technology. What type of economic system does Saudi Arabia have? The 2026 Index of Economic Freedom scores it about 64 of 100 as Moderately Free and 6th in its region. Diversification reforms are underway.

What is the economic system of Saudi Arabia? The economy of Saudi Arabia is based on a mixed economy. The country’s economic system combines elements of a market economy and a planned economy.

Saudi Arabia’s economy is heavily dependent on oil, representing the bulk of export earnings and government revenues. The nation is working on diversifying its economy through its Vision 2030 initiative, with a focus on sectors like tourism, entertainment, and technology. Mining and defense industries are also notable.

No country is purely capitalist or purely communist.

Riyadh skyline illustrating Saudi Arabia's economic system

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What do the freedom indexes tell about the economic system of Saudi Arabia?

For instance, according to the 2026 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Saudi Arabia scores approximately 64 out of 100 and is ranked 6th in the Middle East and North Africa region, placing it in the Moderately Free category — an improvement from prior years as Vision 2030 reforms have eased business licensing and regulatory requirements.

In a similar way, the Freedom House Freedom in the World 2026 report evaluates the state of political rights and civil liberties globally. Saudi Arabia receives a score of 9/100 (As of 2026), which qualifies it as Not Free.

Saudi Arabia is a country where the government controls what people do for political reasons, and people have limited freedom to choose (what, how much and how to produce, whether to buy or not, selling price, etc.)

The Link Between Public Sector Employment and the Economic System of Saudi Arabia

An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Saudi Arabia, according to ILOSTAT and the Gulf Labour Markets and Migration (GLMM) programme, approximately 27% of the total employed workforce (Saudi nationals and expatriates combined) was in the public sector as of Q2 2023 — with the share among Saudi nationals alone at around 52%.

In the country’s mixed economy, the number of public sector employees as a percentage of the total workforce varies based on the specific policies and practices adopted by the State.

Some economic activities are left to the private sector while others are under government control. The bigger the public sector the closer the economy is to being a command economy.

What do the biggest companies in Saudi Arabia say about the country’s economic system?

The biggest company in Saudi Arabia should also be looked at, as well as whether it is a state-owned or private company. Saudi Aramco (Saudi Arabian Oil Company) is the largest company in Saudi Arabia by revenue, reporting total revenues of approximately $436.6 billion for the fiscal year ended December 31, 2024 (As of 2024), according to its official annual results. Saudi Aramco is majority-owned by the Saudi government and is the world’s largest oil-producing company. Saudi Basic Industries Corporation (SABIC), itself majority-owned by Aramco since 2020, is the largest chemical and petrochemicals company in the country.

More: Top 10 Biggest companies by revenue in S. Arabia

The historical factors that have influenced the economic system of Saudi Arabia

The current mixed economy system of Saudi Arabia is a result of the country’s oil-based economy, its reliance on foreign investment, and its efforts to diversify its economy.

The oil industry has been the main driver of economic growth, providing the government with revenue to invest in infrastructure and social services.

Foreign investment has also been important, helping to diversify the economy and create jobs. Finally, the government has implemented policies to diversify the economy and reduce its reliance on oil. The government still controls the main industries but the private markets are growing.