RIYADH, SAUDI ARABIA -- Life offers many opportunities to the ambitious young people who are being educated in this country's new universities and technical schools, but surprisingly few of them are in the oil business. Saudi Arabia is no longer a one-product economy.

Two decades into the great oil boom that transformed Saudi Arabia from a primitive backwater into a modernizing state, less than 1 percent of the labor force is employed in the production or export of crude oil. In what may be the biggest pump-priming operation ever undertaken, the government has used its oil revenue to finance the development of public utilities, communications, agriculture, manufacturing and construction industries that now dominate the domestic economy.

Oil money paid for the land, no-interest loans, tax holidays, cheap electricity, low-cost housing, desalinated water and other incentives that lured foreign investors to build factories here. Oil money financed the fertilizer plants, water pipes and land-development subsidies that made agriculture the fastest-growing sector of the economy. Oil revenue paid for the schools, hospitals and libraries that employ 1.8 million people. Oil money paid for the enormous gas-gathering system that captures and turns into chemical feedstocks the natural gas byproducts that formerly were wasted.

In a laissez-faire environment that presents few obstacles to private investment, these state-financed projects stimulated a thriving private-sector economy in which Saudi citizens are making money in businesses that range from fast-food ventures to maritime insurance.

Statistics compiled by the Ministry of Planning and confirmed by independent analysts show that crude oil production accounts for less than 25 percent of Saudi Arabia's gross domestic product. In an estimated population of 15.2 million -- about half Saudi citizens, the rest expatriates and foreign contract laborers -- only 47,000 workers, or 0.8 percent of the labor force, are engaged in the production and export of crude oil and natural gas.

By contrast, agriculture employs 570,000 workers; trade, hotels and restaurants, 900,000; manufacturing, including oil refining, 375,000; transportation and communications, 262,000; finance and real estate, 100,000; and government agencies -- including schools but excluding the armed forces -- 625,000.

It was staggeringly expensive to modernize and diversify an economy dominated a generation ago by nomadic herdsmen and primitive farmers, but Saudis say it was worth it, politically as well as economically. Government officials, academics and corporate executives interviewed recently said the country wanted to avoid the creation of a restless generation excluded from economic power.

"Now everybody in this country has a personal stake in it -- a house, a job, a school, a secure and safe living and the liberty to do whatever he wants personally," said Hisham Nazer, Saudi Arabia's oil minister and former minister of planning. Western analysts say it goes too far to assert that "everyone" has reached the comfort level described by Nazer -- especially among the Shiite religious minority -- but there is no doubt that Saudi citizens in general are prosperous. The mud-walled oasis villages where today's older generation grew up are deserted now.

But government planners are aware that they have not solved the problem of finding politically acceptable outlets for young Saudis who now take education for granted. The current five-year development plan notes that jobs will be needed for 433,900 Saudis entering the labor force, when overall employment is expected to grow by only 213,500.

Those figures include the armies of imported workers who do the country's dirty work, such as cleaning hotel rooms and slaughtering chickens. Saudi citizens are clustered in government jobs and top management positions. The five-year plan calls for reducing the wage gap between Saudi and non-Saudi workers, calling it "a serious barrier to the employment of Saudis in the private sector, especially in low-skill occupations."

The oil industry alone cannot meet the demand for jobs that pay well enough to attract Saudi labor -- hence the emphasis on diversifying the economy and stimulating new investment by the private sector.

"We're serious about diversification," said Mahmoud Fayez, an official in the Ministry of Planning.

The most visible signs of it are the petrochemical plants proliferating in the government-built new cities of Jubail and Yanbu, he said, but "we have everything here," from jewelry making to food processing.

The biggest weapon in the diversification campaign has been SABIC, the state-owned Saudi Basic Industries Corp.

SABIC was established by a royal decree in 1976. Its mission was to use Saudi Arabia's vast reserves of natural gas, previously a wasted byproduct of crude oil production, as the raw material for a petrochemical industry that would be the foundation of diversification.

SABIC's method was to negotiate joint-venture agreements with foreign partners. SABIC contributed capital, land and raw materials; the foreigners contributed technical knowledge and access to world markets.

By the end of 1989, according the company's annual report, SABIC and its partners owned and operated 15 plants in Saudi Arabia and three in Bahrain, turning out methanol, caustic soda, ethylene dichloride, ethylene glycol, polyvinyl chloride, urea, ammonia, steel and aluminum. It had 9,000 employees, including 5,300 Saudis, and assets of 30 billion riyals, or $8 billion. SABIC reported net income for 1989 of $952 million.

Its partners include Mobil Oil Corp., Exxon Corp., Kaiser Aluminum Co. and companies in Finland, Japan, Germany and South Korea.

"We are an aggressive competitor in the world," said Ibrahim A. Ibn Salamah, SABIC's chief executive officer. "Demand is increasing worldwide, and we intend to keep and expand our share of international markets."

Some European petrochemical manufacturers have complained that SABIC has an unfair advantage because of its access to low-priced gas and government incentives, but Ibn Salamah denied it.

Other skeptics question whether petrochemical industries represent true diversification away from oil or are just the same industry in a different form. Government economists have little patience with this argument.

"Oil and gas are what we have. Why not build on them?" asked one official. "That's our biggest base and we should diversify within it. We aren't going to go into textiles or other industries just so we can say we have them."

He and every other official here said that SABIC and the government do not undertake any venture or enter any partnership unless they are convinced it can make money.