Dr Jasim Hussain
There are many success stories about GCC countries attaining economic diversity. These stories include examples of Dubai’s success in the gold trade, despite it not being a producer of this strategic merchandise.
This has been achieved due to many reasons like the provision of the necessary environment like issuing of visas and work permits for experts in the field. A good number of famous Indian businessmen reside in Dubai, gaining advantage of facilities like visas, free trade zones, and availability of airline connections.
Moreover, the aviation industry offers additional advantage for trade in Dubai as it contributes in making the city a major commercial centre in the whole region. Dubai airport is considered a leading airport in the world for attracting transit passengers on their way to their final destinations.
More broadly, three carriers of the GCC countries managed in the past few years to impose themselves on the worldwide aviation map. Certainly, we are referring here to Emirates, Qatar Airways and Etihad.
In fact, Emirates airline is the largest operator worldwide of giant Airbus A380 as it has the capacity of providing seats for about 500 passengers. In this context, officials of Emirates airline responded angrily to the press statement when France reported the possibility of stopping the production of this type of aircraft because of weak demand. This aircraft is an essential part of Emirates expansion plan.
Just recently, a number of airlines in the United States uniformly addressed aviation industry officials and lawmakers about allegations claiming that there is unfair competition between Emirates, Qatar Airways, Etihad and other airlines in the American market. There is a belief that the three companies get support from their governments which place them at a competitive advantage in comparison with US carriers.
There is no doubt that Gulf carriers started to offer direct flights to many US cities including New York, Washington and Chicago. In this regard, there is news around the possibility of achieving greater penetration by Emirates, Qatar Airways and Etihad in the American market, which is considered the largest airline market in the world.
Personally, I have heard from American colleagues that they prefer to travel using Gulf carriers, given the level of service and care, besides having modern aircraft.
Once an American colleague praised Gulf companies as they give gifts to young travellers. This gesture is appreciated since this behavioural pattern is rarely seen by American companies under the pretext that their market reached the peak of its maturity.
This means that the traveller is mainly interested to receive good airline service in terms of best prices and flight schedules without paying too much consideration to other issues like the service inside the plane.
I also heard from a US resident who is a diplomat in Washington and is required to travel quite a bit that he always stops in Dubai, Doha or Abu Dhabi when travelling to various destinations such as India and Africa.
There are too many things to be mentioned when talking about the aviation sector, but, we should mention Hamad International Airport in Doha, which was inaugurated in 2014. This airport is going to meet the needs of the aviation sector in Qatar for the next 40 years, and it therefore, should contribute to enhancing the status of the aviation sector in Qatar. This airport also played a pivotal role in developing the infrastructure in the country which in turn has an impact on the overall economy.
Looking ahead, Dubai is going to host Expo project in 2020 by offering more opportunities to the private sector; thus this will deepen the phenomenon of economic diversity in this emirate. Among other things, the hospitality, conferences and aviation sectors are expected to be able to increase their relative importance in the local economy in the light of hosting this great international event.
From the other side, World Cup 2022 is expected to contribute in widening the economic diversity in Qatar through enhancing investments in different sectors. For example, the Doha underground project will open the gate for more opportunities in many other sectors, such as construction.
In all cases, it is important to focus on the strengths of any economy when talking about economic competitiveness as a whole. We can certainly say that the economic diversity is an ongoing process, which requires constant monitoring and increases the obligations of those in charge of economic affairs in the Gulf.
Based on the available statistics, it is a must to exert more efforts in diversifying the Gulf economies away from the oil sector. For example, Kuwait’s economy is particularly dependent on oil to achieve prosperity for both people and other sectors. It is noteworthy that the oil sector represents 93pc of the Treasury imports, and about 90pc of exports, as well as 45pc of the total national income, which is clearly excessive.
Fortunately, the GCC has the necessary resources to diversify their economies away from domestic oil trade, wherever possible. At the beginning of 2015, six states controlled collectively a huge sovereign wealth of $2.7 trillion, or 38pc of sovereign wealth in the world, which is a worthy proportion.
Not surprisingly, the oil sector is the primary source of this sovereign wealth. It requires attaining benefits from oil revenues to diversify local economies away from the oil sector, which means using oil to move away from oil trade, which is a big challenge.
Finally, authorities need to take advantage of academic institutions, research centres, civil societies, media and elected bodies in their search for ways to meet the challenges of economic diversity.
I want to confirm that it is not correct to try to imitate Japanese technology or the production cost of China given the special circumstances of each country, including the GCC countries.
The writer is an economist and researcher on GCC economies.
