Economic Development in the Gulf Cooperation Council Countries : From Rentier States to Diversified Economies

This book delves into the economic development of the six Gulf Cooperation Council (GCC) countries. Since the 1960s, the GCC states have harnessed their potential to exploit the wealth accrued from the oil boom to build their infrastructure and grow their economies. However, the high level of dependency on oil as the primary source feeding their output made their economies volatile and vulnerable to fluctuations in the global oil prices. Moreover, the plunge in oil prices and the threat of depletion of this natural resource pose serious challenges to the GCC countries. Consequently, the GCC governments have realized the importance of diversifying their economies following the need to move away from reliance on hydrocarbon. This book contributes to the theoretical literature by enriching the debate on the transition of the GCC countries from rentier states to diversified economies. It helps students and scholars understand this transformation with an expansive comprehension of the contemporary challenges facing the region, as well as outlining prospects for the future. Introduction 6 The GCC Countries at a Glance 6 Towards Post-Energy Economies 7 GCC Countries’ Contemporary Issues and Prospects 8 Book Outline 9 Contents 12 Natural Resources Curse and Economic Diversification in GCC Countries 14 1 Introduction 14 2 Understanding the Cursing-Blessing Dilemma 15 3 Natural Resources, Economic Development and Diversification in the GCC Countries 17 3.1 Natural Resources in the GCC Countries: Cursing or Blessing? 17 3.2 Does the Lack of Diversification Hinder Economic Development in the GCC Countries? 20 4 Conclusions and Policy Implications 25 Appendix 27 References 30 Climate Agreements’ Implementation Through Energy Transition and Economic Diversification in Kuwait 32 1 Introduction 33 2 Energy Transition in Kuwait 34 2.1 Fossil Fuels 34 2.2 Renewable Energy 39 2.3 Energy Projections 40 3 Economic Diversification in Kuwait 44 3.1 Diversified or not Diversified? 44 3.2 An Outlook Toward Diversification and Structural Change 48 3.3 Policy Reform 50 4 Conclusion and Policy Recommendations 52 References 53 Knowledge-Based Development and Economic Diversification: The Case of Qatar 56 1 Introduction 57 1.1 Knowledge-Based Economy 58 1.2 Innovation Ecosystem 59 1.3 Knowledge-Based Economy Transition in Qatar 60 1.4 Public Policies and National Strategies for KBE in Qatar 61 1.5 Qatar Innovation and Entrepreneurship Ecosystems 62 1.6 Qatari Public Policies and Ecosystems and KBE Alignment 64 2 Economies’ Development Stages 64 2.1 Global Competitiveness Index (GCI) 64 2.2 Qatar’s Performance in Global Competitiveness Index (GCI) 66 2.3 Qatar’s Economy Development Stage 67 3 Innovation Capabilities 72 3.1 Global Innovation Index (GII) 72 3.2 Qatar Performance in the Innovation Capabilities 73 3.3 Strengths and Weaknesses in Qatar’s Innovation Capabilities 74 4 Entrepreneurial Ecosystem 79 4.1 Global Entrepreneurship Index (GEI) 80 4.2 Qatar Entrepreneurial Ecosystem Performance 80 4.3 Qatar Entrepreneurial Ecosystem, Strengths and Weaknesses 80 5 Conclusion and Recommendations 83 References 85 Food Security in the GCC Countries: Towards a More Diversified and Sustainable Economic Development 87 1 Introduction 87 2 Food Security in the GCC Countries: Challenges and Opportunities 88 3 What Strategies Do the GCC Countries’ Development Visions Suggest for Food Security? 93 4 Geopolitics Matter: Impact of the Gulf Crisis on Qatar’s Food Security 96 5 Conclusion 98 References 99 Why Should Saudi Arabia Diversify Its Economy? 101 1 Introduction 101 2 Part 1: Energy Transition and Economic Diversification 103 3 From Fossil Fuels to Renewable Energy 104 3.1 Energy Context in Saudi Arabia 104 3.2 Renewable Energy Potential in the Kingdom of Saudi Arabia: Key Challenges, Strategies, and Lessons Learned 109 4 Reorientation of Investments, Government Expenditures, and FDI: The Kingdom of Saudi Arabia 2030 Vision 111 5 Part 2: Case Studies of Sustainable Projects 114 6 Smart Megacity: NEOM 114 7 Sustainable Tourism in Saudi Arabia 116 8 Conclusion: Projections and Policy Recommendations 118 References 119 Corruption, Rentier States and Economic Growth Where Do the GCC Countries Stand? 122 1 Introduction 122 2 Corruption, Growth and Economic Diversification 124 3 Does Corruption Affect Economic Growth in the GCC Countries? 126 4 Conclusions and Policy Implications 131 References 132 Oman’s Shift to a Post-Oil Economy 135 1 Introduction 135 2 The Discovery of Oil and Gas and the Shaping of Oman’s Economy 137 3 The Need to Shift Towards a Post-oil Economy 138 3.1 Limited Oil and Natural Gas Resources 139 3.2 Oil Price Shocks 139 3.3 Climate Change 140 4 Early Stages of the Oil Era 1970–1995 140 4.1 Preparatory Stage 1970–1975 140 4.2 Initiation and Implementation of 5-Year Plans 1976–1995 141 5 The Rise of Economic Diversification Ambitions and Vision 2020 (1996–2020) 142 6 Successes and Failures of Vision 2020 142 6.1 Human Resources Development 143 6.2 Diversification of Revenue Sources 144 7 Vision 2040: Handovers and Lessons from Vision 2020 146 8 Conclusion 147 References 148 The Journey of Bahrain to Economic Diversification 151 1 Introduction 151 2 Changes in Bahrain’s Economic Structure 153 3 Diversification and Government Policies 155 3.1 Provision of Infrastructure 155 3.2 Provision of Skilled Labor 156 3.3 Investment Incentives 157 3.4 Government and Foreign Participation in Equity Stock 158 4 Diversification in Non-oil Sectors 158 4.1 The Manufacturing Sector 159 4.2 Financial Sector 160 4.3 Tourism Sector 162 5 Conclusion 164 References 166 Towards Changes of Macro-Economic Structures in Middle Eastern Countries. Empirical Evidence for 1970–2018 167 1 Introduction 168 2 GCC Member Economies 169 3 Materials and Empirical Settings 172 3.1 Data Explanation 172 3.2 Methods Applied 172 4 Empirical Results 173 5 Conclusions 179 Appendix 180 References 185 UAE Economic Diversification: A Medical Tourism Perspective 187 1 Background 187 1.1 Need for Research 188 1.2 Objectives 189 1.3 Methodology 189 2 Economic Diversification 189 2.1 Why Economic Diversification? 190 2.2 The UAE Medical Sector for Pursuing Economic Diversification 191 3 A Glimpse into the Medical Tourism Industry 193 3.1 Current Medical Tourism Situations in Different Countries 193 3.2 Current UAE Medical Tourism 195 4 Way Forward and Conclusion 196 References 198 Why Gulf Rentier Economies Must Pursue Economic Diversification 200 1 Introduction 200 2 The Consequences of Being Rentier Economies 201 2.1 The Performance of Public Finance (Government Budget Surplus/Deficit) During the Deterioration of Oil Prices 203 2.2 The International Reserves During the Deterioration of Oil Prices 204 2.3 The GDP Growth Rate During the Deterioration of Oil Prices 205 2.4 The Stock Market Performance During the Deterioration of Oil Prices 205 2.5 The Trend of the Economic Sectors in the GCC Countries 207 3 The Diversification Strategy for the GCC Countries 208 3.1 Petrochemicals Industry in the GCC Countries 208 3.2 Renewable Energy in the GCC Countries 212 3.3 Tourism Sector in the GCC Countries 213 3.4 Medical Tourism in the GCC Countries 214 3.5 Islamic Finance and FinTech in the GCC Countries 214 3.6 Value Added Tax as Revenue Diversification 215 4 Conclusion and Policy Recommendations 216 References 217 Front Matter ....Pages i-xii Natural Resources Curse and Economic Diversification in GCC Countries (Sami Ben Mim, Mohamed Sami Ben Ali)....Pages 1-18 Climate Agreements’ Implementation Through Energy Transition and Economic Diversification in Kuwait (Nathalie Hilmi, Shekoofeh Farahmand, Manal Shehabi)....Pages 19-42 Knowledge-Based Development and Economic Diversification: The Case of Qatar (Ahmed Almoli, M. Evren Tok)....Pages 43-73 Food Security in the GCC Countries: Towards a More Diversified and Sustainable Economic Development (Khalil Yahya Al-Handhali, Héla Miniaoui)....Pages 75-88 Why Should Saudi Arabia Diversify Its Economy? (Nathalie Hilmi, Shekoofeh Farahmand, Fateh Belaid)....Pages 89-109 Corruption, Rentier States and Economic Growth Where Do the GCC Countries Stand? (Nicholas Apergis, Mohamed Sami Ben Ali)....Pages 111-123 Oman’s Shift to a Post-Oil Economy (Aisha Al-Sarihi)....Pages 125-140 The Journey of Bahrain to Economic Diversification (Anis Khayati, Jaffar Al-Sayegh)....Pages 141-156 Towards Changes of Macro-Economic Structures in Middle Eastern Countries. Empirical Evidence for 1970–2018 (Ewa Lechman, Radosław Slosarski)....Pages 157-176 UAE Economic Diversification: A Medical Tourism Perspective (Jawaher Ahmed, Immanuel Azaad Moonesar, Mona Mostafa, Lama Zakzak, Faraz Khalid)....Pages 177-189 Why Gulf Rentier Economies Must Pursue Economic Diversification (Ahmed A. Khalifa, Abdul-Jalil Ibrahim)....Pages 191-208