October 31, 2017

Visions of Change

Road in Saudi Arabia
HIghway in Saudi Arabia (Adobe Stock)

As Gulf Arab governments adjust to fiscal deficits driven by lower oil prices, the state, traditionally the leader in economic development, is under pressure to utilize available finance from the private sector. In labor markets, the state will need to reassess its role in providing the bulk of job creation for Gulf citizens, as well as question its reliance on low-wage foreign labor. These recalibrations of the Gulf economic development model have been under discussion in the “visions” of national development plans for some time. But the necessity of expeditious structural reforms is now far more pressing. Diversification away from resource-dependent state spending will require changes across the economies, and the societies, of the Gulf Arab countries.

AGSIW’s Visions of Change series examines how the Gulf Arab countries are addressing reduced hydrocarbon revenue and responding to pressures to liberalize their economies. This series engages how these efforts are unfolding across the region, by sector and country, to underline the challenges, opportunities, and risks of innovation and economic change.


Weathering Climate Change in the Gulf

By Mai Mahmoud
November 14, 2017

Climate change and environmental degradation are among the most pressing threats facing countries of the Gulf Cooperation Council. There is ample evidence of extreme weather events in the Gulf region, ranging from extreme summer temperatures to unprecedented flooding and intense tropical storms. The impacts of climate change are not only environmental but also have economic and socio-political dimensions.
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Beyond Building: Private Financing, Ownership, and Management of Gulf Infrastructure

By Justin Alexander
August 14, 2017

In response to fiscal pressures and concerns about the efficiency of project and service implementation, Gulf Arab states are increasingly looking to the private sector to finance and manage infrastructure projects. This is a relatively new development because private involvement was previously limited largely to the telecoms and the power and desalination sectors. Now, a broader array of projects and activities are being considered for private sector involvement, ranging from airports in Saudi Arabia to hospitals in Kuwait and a stadium in Qatar. There is widespread interest in public-private partnership (PPP) models: Kuwait and Dubai have passed laws to govern these structures, and Qatar and Oman (and possibly Saudi Arabia) are also developing their own. In addition, there has been a renewed focus on privatization of state-owned assets, particularly in Saudi Arabia in the context of its National Transformation Program.
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Prioritizing Renewable Energy in a Time of Fiscal Austerity

By Karen E. Young
June 29, 2017

Surging population growth, large-scale infrastructure investment, and economic development progress have led to increased energy demand in the Gulf Cooperation Council states. Since late 2014, the new normal of low oil prices has necessitated fiscal constraints and at the same time prompted greater interest in renewable energy sources. It is therefore an opportune moment to examine the demand for and supply of renewable energy finance. Making renewable energy work in the GCC states would meet long-standing economic diversification goals. Seizing the moment for change would also take advantage of shifts in global capital markets that have generated new products for infrastructure and energy finance. Asking why now, this paper contextualizes renewable energy investment and production within the current fiscal challenges of the Gulf Arab states.
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Economic Diversification Plans: Challenges and Prospects for Gulf Policymakers

By Kristian Coates Ulrichsen
September 26, 2016

This paper puts the attempts by Gulf Arab states and Iran to launch large-scale development programs into historical and comparative context. Strategic “visions” have been a hallmark of regional policymaking for more than two decades but persistent difficulties in implementation have meant that the plans have fallen far short of intended outcomes. By focusing on the practical and political challenges of technocratic and economic reforms, using specific examples to illustrate broader thematic points, this paper analyzes what the current generation of officials need to do differently to secure more favorable and sustainable results. Although the prolonged fall in oil prices has provided officials with a window of opportunity to introduce politically and economically sensitive reforms, the urgency of the fiscal pressures on budgets on both sides of the Gulf means there is little margin for error, and it is vital that decision makers absorb the lessons from the flawed earlier attempts at reform.
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