Resumo de Beyond Oil: Reappraising The Gulf States

The high price of oil presents the leaders of the Gulf Cooperation Council (GCC) states?Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)?with a singular opportunity to diversify their economies beyond hydrocarbons. How they manage that opportunity has far-reaching implications not only for their own populations but also for the entire global economy. The challenge before these leaders is substantial. Unemployment is high, particularly among the young, and in the years ahead the GCC states must create millions of new private-sector jobs. Doing so will require crucial reforms to labor markets and to financial and educational systems. Can the GCC states do it? Skeptics, noting that countries rich in natural resources?especially oil?often struggle to manage their wealth, argue that the current high prices actually present an impediment to reform. We have a different view: given the growing pressure within the GCC states to reduce unemployment and provide jobs for an unusually young labor force, oil revenues will serve as a catalyst to continue the reforms needed to break away from the boom-and-bust cycles that volatile energy prices create. Already, the region?s dynamism has fostered some noticeable changes, evident in areas as diverse as the Dubai skyline and greater foreign interest in the region. Foreign direct investment into the GCC, for example, rose from just under $2 billion in 2001 to more than $20 billion in 2005?a trend that will help integrate the GCC?s insular economies into the global economy and provide an additional impetus for reform (Exhibit 1). Roughly $1 trillion in infrastructure investments are now in the pipeline, and by decade?s end they could total $3 trillion. Although in recent years the region has posted real growth rates of about 7 percent?low compared with those of China and India?its growth is stronger than that figure suggests. Nominal (rather than real) growth is about 20 percent a year (according to figures from 2003 to 2005)?among the world?s fastest rates. For the GCC, nominal growth more accurately reflects the region?s dynamism, since real growth rates treat oil price hikes as inflation and don?t take into account the fact that much of the revenue that oil producers earn comes in US dollars. The stakes are high not only for the GCC states but for the rest of the world as well. Beyond the obvious political importance of a stable GCC, developments in the region could shape global investment flows more and more significantly. This influence is already visible. The combination of ever-stronger institutions, ambitious leaders, and sustained oil income?coupled with comparatively lower growth in a more challenging West?has prompted the GCC states to look to the East. Whereas five years ago investment portfolios were predominantly passive and concentrated in North America and Europe, Gulf investors are now hungry to identify opportunities in Asia (and Africa), where they are looking for influence as well as returns. If current trends continue, the Gulf will play a central role in channeling oil income generated in the West to investments in the East. Thus might the GCC states become key players in the financing of a new Silk Road (see ?The new Silk Road: Opportunities for Asia and the Gulf?).

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