National advantage in the crude petroleum industry is heavily dependent on the existence of a natural resource base in crude oil reserves. Saudi Arabia possesses the largest known of crude oil reserves in the world (Hunter, 1994, pp. 1147 1148). National advantage in the crude petroleum industry is also dependent on the existence of a skilled labor pool and the development of the necessary industrial and communications infrastructures. Initially, Saudi Arabia depended upon expatriate skilled labor; however, an indigenous pool of skilled labor is now in place (Mohamedi, 1993, pp. 134 157). The necessary infrastructures are also in place (Mohamedi, 1993, pp. 141 157). With respect to factor conditions, therefore, Saudi Arabia's crude petroleum industry is in an exceptionally strong position.
Demand conditions in an assessment of national advantage are typically considered within the contexts of domestic demand. With respect to natural resource based industries, however, external demand conditions may be of even greater significance. Such is the case with Saudi Arabia's crude petroleum industry, wherein international demand for crude petroleum is of greater significance than is domestic demand in the development of a national advantage. International demand for crude petroleum has weakened over the past 15 years. While the demand remains sufficiently strong to assure the viability of the crude petroleum industry in Saudi Arabia, the weakened international demand has eroded the strength of the Saudi Arabian position that existed in the late 1970s. With respect to demand conditions, therefore, Saudi Arabia's crude petroleum industry is in a moderately strong position.
Overall, the national diamond for the crude petroleum industry in Saudi Arabia contains one exceptional strong point, two moderately strong points, and one point characterized by both strength and weakness.
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