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    Gulf countries are not producing enough research about diversification

    June 1, 2023 -


      The Gulf countries are attempting something globally unprecedented: transitioning from resource dependence to a knowledge economy while maintaining high living standards. A critical success factor is producing and disseminating high-quality scholarly research about this transition. So far, the Gulf countries' research efforts leave plenty of room for improvement.

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      In 2015, when oil prices had just crashed, the six members of the Gulf Cooperation Council (GCC) had lots in common in terms of their underlying economic structures: high living standards, a large dependence on hydrocarbons in the economy, and government budgets that were extremely skewed toward the oil and gas revenues accruing to the state.

      The GCC countries also had labor markets where migrant workers accounted for upward of 75 percent of the labor force. Finally, all six states had chronically low levels of innovation, which is generally considered to be the main source of economic growth in countries that do not have a large endowment of natural resources.

      These properties made the GCC economies look very different from what you would find in a generic economics textbook. Moreover, the academic literature analyzing these economies was nascent, with most of the cutting-edge intellectual tools developed for dealing with economies like the UK and the US remaining unapplied to the GCC economies.

      Simply put, the economists analyzing our region - whether locally or externally based - either lacked the requisite advanced research skills or were starved of the high-quality data needed to apply cutting-edge concepts to the GCC economies.

      This is one reason (though not the only reason) why the Gulf governments leaned on consultancies when developing new economic strategies for a world of low oil prices. GCC-based university and think tank researchers could not deliver the contribution that an economist at Harvard University or the Institute for Fiscal Studies could make.

      Nevertheless, once the transitions were underway, a need for local scholars to document and analyze those transitions immediately materialized. The viewpoint of economists working in the International Monetary Fund and World Bank is undoubtedly valuable. However, it is a poor substitute for an economist residing in Saudi Arabia or the UAE, witnessing the transformations first hand, and discussing the policies with the civil servants in charge of formulating and implementing them.

      Moreover, this process of self-learning could be augmented by mutual learning, as each of the GCC countries had its own idiosyncracies and unique policy choices. Oman had much to benefit from studying what was and wasn't working for Qatar and vice versa. The production and dissemination of high-quality research is probably the most effective way to institutionalize the adoption of lessons learned.

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      In this regard, the experience of economic transition that the Eastern European countries underwent following the collapse of communism is highly instructive. I was an economics undergraduate student in the 1990s, and our classes were full of cutting-edge papers describing what was going on in countries such as the Czech Republic and Poland. Like the GCC states today, they were experiencing an unprecedented transition in a short period, and each country also had its own subtly different approach to that transition.

      Governments were engaging the leading minds in these countries as they realized that the quickest route to success involved maximizing the lessons learned from their own experiences and from those of their peers east of the former Iron Curtain.

      A more salient current illustration is the renewable energy transition that Western economies are undergoing. The volume of accompanying research is astounding, covering multiple disciplines. It ensures that when flaws are exposed - as occurred when the Ukraine crisis erupted - the lessons are rapidly absorbed.

      Today in the Gulf, we do not see this kind of commitment, even though the stakes are just as high. If you peruse academic journals to see what they offer regarding the current economic transitions in the GCC, the results are less than impressive.

      In economics, you will find the odd paper on certain narrow dimensions of the transformations, such as studies of the impact of increasing female labor force participation or ones that examine how to improve energy conservation. However, you won't find anything that looks at the big ticket questions, such as the success factors in the megaprojects, or an evaluation of the fiscal transformations.

      There are more papers in the academic journals on Middle Eastern studies, but they are methodologically weak. The papers written by Western-based scholars tend to suffer from data limitations, while the papers scribed by local scholars display evidence of constrained writing lacking objectivity.

      The net result is that the learning process proceeds more slowly. Certainly, there are substitutes, such as having groups of civil servants share knowledge with their peers in other GCC states and with their domestic colleagues working in other government agencies. However, what this method boasts in terms of speed and accessibility comes at the expense of depth and rigor, as civil servants do not have the time to produce extended treatizes describing their observations on economic transition.

      Moreover, the Gulf countries are also missing out on the opportunity to market their progress to academics working in other countries. A professor in Stanford University or Oxford University likes to learn by engaging their peers in other countries via academic journals or professional conferences.

      While this group of nerds - for want of a better word - is not as influential as politicians and high-ranking civil servants, they still make an outsized contribution to society and policy. Accordingly, the GCC countries are leaving stones unturned in their broader geo-political strategies by failing to engage them in their preferred language.

      Finally, our grandchildren deserve to have our fascinating experiences rigorously documented so they can learn about them. What a country like Saudi Arabia is undergoing today will contribute to the sense of national identity that future generations possess, so it makes sense to have a coherent scientific narrative about what we are living in the first half of the 21st century. The science fiction author Michael Crichton captured this sentiment when he quipped: "If you don't know history, then you don't know anything. You are a leaf that doesn't know it is part of a tree."

      Omar Al-Ubaydli (@omareconomics) is a researcher at Derasat, Bahrain.


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