In developing these scenarios,the Forum closelyinvolved senior executives from leading global compa-nies,as well as thought leaders,scenario practitioners,and public figures.Together they identified the followingcritical questions:•Will leaders in the GCC countries be willing andable to implement the necessary economic andpolitical reforms and enforce the rule of law,bothin public and in private governance?•Can the GCC countries maintain internal order and stability,in particular vis-à-vis a complex anduncertain regional situation?Answering these questions in different ways provides thebasis for imagining different futures for the GCC coun-tries based on their progress in implementing economic,political,and social reforms and the various possibilitiesin terms of regional stability.Both questions are also of vital importance for the evolution of national competi-tiveness and economic growth.
Key themes of the scenarios
The GCC countries have benefited enormously fromoil and gas reserves and assets that have generated signif-icant financial liquidity in the six years between 2001and 2007.Its present wealth poses an interesting questionfor those interested in the future of the GCC countries,and one that these scenarios seek to address:How canthis wealth be put to use to ensure that the GCCcountries expand in affluence,and also ensure that theyovercome the internal and external pressures that couldshift them from the path of sustainable prosperity?In positing three possible futures that address thesequestions in different ways,two key themes consistentlyemerge as being crucial to the future of the GCCcountries.Both of these directly and indirectly affectthe competitiveness of the GCC countries:•
Education and innovation.
The GCC countriesface the challenge that their collective oil reserves,although vast,will not last forever.Nor are oil andgas always a reliable source of wealth—there havebeen many times when GCC budgets were in deficitand public debt rose as a result of falling energyprices.However,in attempting to diversify awayfrom oil,the GCC countries face a major problemin that their existing skill base for workers is low byworld standards,and relatively little research,devel-opment,and innovation are occurringin the region.Data from the Global Competitiveness Index indi-cate that the region significantly lags behind in termsof education and innovation (see Chapter 1.1 of this
for a more detailed discussion).Enrollment rates in educational institutions remainlow on average,particularly at the tertiary level,andthe quality of education is in need of upgrading.Inthe innovation category,all countries with theexception of the United Arab Emirates and Qatar rank in the lower half of the overall sample of 128countries.A closer look at the results points to theweak quality of local research institutions as well asshortages in qualified staff as the most importantreasons behind the lagging R&D performance of the GCC region.This creates an impediment todevelopment and exacerbates other problems asso-ciated with importing both foreign workers andtechnologies.As a result,the way in which educa-tion policies are handled by GCC governments willbe a significant determinant of the region’s abilityto develop as innovation-based economies that donot wholly rely on natural resources.•
Leadership and governance.
The GCC countriesare ruled by traditionally organized family groups,with varying underlying executive,legislative,and judicial models.Leadership and governance willtherefore be instrumental in determining the paththat the GCC countries will take over the next 20 years.Although much is being undertaken today interms of reform to improve the efficiency andopenness of these systems,the strategies chosen andthe rates of change vary between GCC countries.In managing both internal stability and reforms,andthus in determining the structure and strength of institutions,leadership plays a critical role at all levelsof GCC government as well as in the private sector.Before discussing the scenarios and their implications indetail,it is useful to take a look at the competitivenesslandscape of the GCC countries that emerges in 2007.
Current competitiveness challenges in the GulfCooperation Council countries
The results of the Global Competitiveness Index high-light a number of competitive strengths and weaknessesfor the five GCC countries it covers—Bahrain,Kuwait,Oman,Qatar,and the United Arab Emirates.The Indexassesses competitiveness of countries by looking at ninecriteria that affect competitiveness:institutions,infra-structure,macroeconomy,health and primary education,higher education and training,market efficiency,techno-logical readiness,business sophistication,and innovation.The average results in these categories are benchmarkedagainst Singapore in Figure 1.
Not surprisingly,given the current surge in oilprices,members of the GCC display stable macroeco-nomic indicators.In particular,oil revenues combinedwith better fiscal management than in previous yearsfueled budget surpluses and enabled governments topartly repay public debt and increase national savings,
3 . 1 : T h e G C C C o u n t r i e s a n d t h e W o r l d : S c e n a r i o s t o 2 0 2 5