A gas flame is seen in the desert near the Khurais oil field, about 160 km (99 miles) from Riyadh, June 23, 2008. REUTERS/Ali Jarekji

In Saudi Arabia, revenue from oil exports funds virtually every aspect of public life. Jobs for its citizens, roads and bridges, research hubs, subsidized fuel — little remains untouched by the kingdom’s vast oil wealth. But the continuous plunge in oil prices over the past year is putting the Saudis’ oil-soaked system in jeopardy. Officials are facing growing pressure to diversify the economy and wean the nation from its reliance on oil revenue.

It’s a strategy the Saudi government has tried to adopt for decades, mostly without success. Early development plans called for boosting sectors such as mining, petrochemicals, tourism and financial services. Leaders have repeatedly pledged to expand the manufacturing base, add more private-sector jobs and attract more foreign investment; yet oil remains the linchpin of the Saudi economy.

“They’re still hooked on oil,” said David Ottoway, a Middle East fellow at the Wilson Center in Washington. He added that government plans often gain steam when crude prices drop, but “as soon as oil prices go back up, they relax.”

Saudi Arabia Overview | FindTheData

Saudi officials have listed economic diversification as a top priority for nearly half a century. In 1970, the government issued its first five-year development plan, which called for diversifying “sources of national income and reducing dependence on oil by increasing the share of other productive sectors in [gross domestic product].” In nine subsequent plans, the government restated its mission to expand other sectors of the economy and shrink oil's share of revenue.

An analysis of those five-year strategies, from 1970 to 2013, found the government largely failed in its objectives, Bassar Al-Bassam, director of special programs at the Institute of Public Administration in Riyadh, said in a June 2015 report published in the Resources Policy journal.

He noted that officials lacked a clear strategy for diversifying the economy and supporting non-oil sectors, including agricultural services. Meanwhile, the government continued providing financial support for oil-dependent industries such as petrochemicals. “After more than 40 years of development plans aiming to diversify the Saudi economy, oil is still the main engine driving the economy,” Al-Bassam said in his report.

The government of King Salman bin Abdulaziz is vowing to bring about the long-awaited economic transformation.

Prince Mohammed bin Salman, the deputy crown prince, has promised to unveil a sweeping blueprint for economic change this month. The 30-year-old told the Economist in an interview last week that his plan will include privatizing some state-owned sectors and slashing public spending in healthcare, education and parts of the military.

The strategy would be one of the kingdom’s biggest policy shake-ups in recent decades. Its proposal arrives at a crucial time for the country of 29 million people.

The Saudi government posted a budget deficit of $98 billion — or 15 percent of its GDP — last year amid plummeting revenue from oil exports, which account for about 80 percent of total budget revenue. Oil prices have dropped around 70 percent since mid-2014, slipping to below $30 a barrel Tuesday, their lowest level since December 2003. Saudi officials predict a deficit of $87 billion in 2016 if crude prices keep their current levels.

Brent Crude Oil Spot Price | FindTheData

Saudi Arabia, the world’s largest oil exporter, isn’t in immediate danger of running out of money: It still has more than $600 billion in foreign-asset reserves to help plug the budget gaps. But the downturn in crude prices shows how vulnerable the economy remains to volatile oil markets. With a weak labor force and limited productivity in other export sectors, such as mining and agriculture, Saudi Arabia could be plunged into a crisis unless it diversifies its economy or oil prices rebound.

The country’s productivity — the output per hours worked — grew only 0.8 percent from 2003 to 2013, substantially lower than the 3.3 percent average in annual productivity growth within other G20 emerging economies, the McKinsey Global Institute, the research arm of consulting giant McKinsey & Co., said in a recent study.

Saudi labor force participation is just 41 percent, and most people work in the public sector, which is vulnerable to budget cuts and relies on oil revenue. More than half the country’s labor force comprises foreign workers on temporary contracts who earn considerably less than Saudi nationals, the McKinsey report said.

Saudi officials in recent years have attempted to expand non-oil exports and create steady jobs by plowing oil revenue into sweeping projects.

The kingdom is investing more than $70 billion to build six new “economic cities” with modern infrastructure and business-friendly regulations. On the Red Sea coast, in the King Abdullah Economic City, the U.S. confectionery giant Mars Inc. is building a $200 million factory to produce its Galaxy chocolate bars. The government’s goal is to build industry hubs where private companies can collaborate and boost their productivity.

U.S. chemicals giant Dow Chemical Co. is teaming up with Saudi Aramco, the state-owned oil behemoth, to build a $20 billion petrochemicals plant. Several large aluminum manufacturers, including America’s Alcoa Inc., have recently set up plants inside the kingdom, where raw materials and electricity are cheap. Most recently, Saudi Aramco confirmed it is considering listing public shares of the company to bolster revenue.

Crude Oil Production in Saudi Arabia | FindTheData

The McKinsey researchers estimated that Saudi Arabia will need $4 trillion in investment to diversify and expand its economy by 2030. The figure is based on the firm’s calculation that it takes additional investment of 2.5 percentage points of GDP to generate each additional 1 percent of GDP growth. The consultants estimated with $4 trillion, the Saudi economy could double its GDP and create as many as 6 million new Saudi jobs within 15 years.

“To effect real change, labor and business regulation, and government’s own way of working, need to change to become more market-oriented and productivity-driven,” said Jonathan Woetzel, who directs the McKinsey Global Institute and led the independent study on Saudi Arabia. He added the kingdom should “consider building on past efforts by adopting a broader, deeper and faster approach to labor, business and government productivity reform than has been attempted before.”

Salman, for his part, brushed aside the $4 trillion calculation in the recent interview with the Economist. Still, he likened Saudi Arabia’s latest economic strategy to the U.K.’s economic overhaul under Margaret Thatcher in the 1980s. Thatcher pushed through free-market policies that included steep cuts to British welfare programs and the privatization of state-owned industries.

The Saudi strategy could “most certainly” be compared to the Thatcher era, he told the Economist.

Ottoway and other experts on Saudi Arabia said it is still too early to know whether Salman’s blueprint will stick.

“I’m cautious to skeptical about their new attempt to get off their addiction to oil,” Ottoway said. “The question is whether they have the sustained political will.”

Shaul Gabbay, who directs the Global Research Institute at the University of Colorado in Denver, applauded the Saudi officials for confronting the kingdom’s oil dependence. But he said he didn’t doubt that Saudi Arabia would delay its diversification plans if oil prices returned to higher levels, as has happened so many times in the past.

“The ‘why’ is important,” he said of the country’s new economic strategy. “If it’s just because oil prices went down, then when they go up it will change. But if it’s because of a profound understanding of the economy, which is met with concrete tactical actions on the ground, then that will be a very positive direction.”