5 - Human factors in the Gulf economies

Summary

It is somewhat trite – but very true nonetheless – to observe that human factors are the most important element in the success of an economy. It is the labour of a workforce that adds the greatest value to most goods and services. It is because of a workforce’s education, training, employment experience, and continued development that an economy remains effective and, perhaps most importantly, is internationally competitive. It is entrepreneurialism and innovation, driven by particular individuals or distilled across an organization or culture, which is most crucial in expanding and developing an economy and improving real wages. It is via positive but appropriate rates of population growth, suitable immigration policies, and other demographic change that a workforce maximizes its economic potential – and moreover, such factors are also important in ensuring social stability and in assisting societies to respond to the pressures of economic changes.

The Arab states of the Gulf possess a unique demographic profile, characterized by a range of demographic and human capital features that contain both positive and negative features. The degree of economic reliance on foreign labour is perhaps the most obvious, but important too are (indigenous) population growth rates, labour market policies, the education and training framework, and gender and intergenerational dynamics. These occur in a framework set by the political order, and by structural and historical dynamics. Culture matters too, to the extent that it shapes corporate and institutional cultures and liberates or constrains the ambitions of societal groups and forces. The purpose of this chapter is to explore some of the more important human factors that have shaped the Gulf ’s economies, and which will be key elements – perhaps even deciding ones – in determining its prospects in the future.

WEALTHY SOCIETIES?

As already discussed, the Gulf economies are, by conventional measures, very wealthy. Nominal GDP per capita varies by country, from upper-middle income levels in Bahrain, Oman and Saudi Arabia, to levels in the UAE, Qatar and Kuwait that are comparable to the developed OECD economies. Infrastructure, capital, and public utilities are of a high standard: to a visitor, public spaces and infrastructure generally seem physically comfortable, and state services appear to be freely available and good quality.