SAUDI ARABIA & TURKEY PRIVATE WEALTH

http://www.mei.edu/content/wealth-management-industry-middle-east-boon-or-bust

Comparing the Region's Two Key Private Wealth Prospects: Turkey and Saudi Arabia
Comparing Turkish and Saudi wealth creation provides a fascinating glimpse at (and forecast of) the future of wealth management in both countries. Both economies have organised family interests which control large shares of the economy. However, in Turkey, these family-oriented interests focus on local productive economic activities which generate wealth. In Saudi Arabia, these family interests tend to invest resource gains abroad.
Saudi Arabian companies (and the ultra-high net worth individuals that own and control them) tend to invest less in diversified and high-tech sectors, which will create a larger class of affluent bank clients. Figure 7 provides an extremely unrigorous (though illustrative) overview of the differences in investment behaviour between Saudi Arabia and Turkey. The majority of Turkish economic activity (as measured in percent of GDP) focused on services rather than industry in 2010. In Saudi Arabia, most productive enterprise (the result of previous investment decisions) still centres around industry, particularly the oil sector. Saudi Arabian business — at least according to the World Economic Forum — ranks 42 places above Turkish business. However, such competitiveness will likely increase the wealth of Saudi Arabia’s existing wealthy — rather than create more dollar millionaires. Looking at the high-tech and R&D-based industries, which have made many of the US’s and Europe’s millionaires, provides a clue about the way future economic growth will translate into future private wealth clients. In 2007 (the latest year data are available), Turkish high-tech exports outstripped Saudi ones by a ratio of roughly 8-to-1. Turkish companies’ R&D expenditure — investment needed to promote sustainable growth and economic diversification — eclipsed Saudi expenditure by about 13-to-1. Turkish patents and scientific journal articles outnumbered Saudi ones by about 7.5-to-1. Keeping in mind the usual caveats about arguing using selected cases, Turkish companies seem to make the types of investments which much of the literature suggest lead to higher and more wide-spread incomes.