OIL & DEVELOPMENT

A C A S E S T U DY O N G C C C O U N T I R E S

HISTORY OF GCC COUNTRIES

A poor region before the discovery of Oil
Rapid Development in the 2nd half of 20th Century
Large Revenues from Oil Exports
Steady source of income
Government spending to develop economy
Increased spending in public sector like
infrastructure, health, education and
employment
Developed housing and Tourism

DEVELOPMENTS IN GCC COUNTRIES

A strong growth rate of 7.5% by 2011
Changes in Fiscal policies & increase in spending
by 20%
Expenditures dedicated to Current expenditure
and employment of people

DEVELOPMENTS IN GCC COUNTRIES

Low Interest rates and anchored exchange rates
Subsidies for food and inflation below 5%
Fiscal surplus of about 1/4th of the GDP
Decline in non-oil revenue growth rate

GDP Growth Rates of GCC Countries

Non-Oil GDP of GCC Countries

Expenditure Growth Rates of

GCC Countries

Inflation in GCC Countries

Economic Problems
Large surplus and large government spending lead to
high breakeven prices for oil
Too much reliability on oil income
Depletion of Oil resources will lead to reduction in Oil
Revenues
Existing Fiscal Policy will face deficit unless modified
Lack of taxation and other fiscal instruments
No other sources of income
Untapped human capital

Oil & Gas Revenues

Diversification & Development

Diversifying into different sectors of revenue
generation
Modification of Fiscal Policy and implement
instruments like taxes, surcharge, fees, etc.
Providing opportunities for industrial development
Service Industry/Sector Development
Development of Tourist and financial hubs

CONCLUSIONS
Oil revenues effect lasted less than a century
Earliest Oil discovering countries progressed and
are performing better than a few Western Cities
Lack long-term economic development
opportunities
High reliability on Oil Productivity
Lack industrial development

CONCLUSIONS

An effective
decline in
infant mortality
from 25 to 7.

CONCLUSIONS

Increase in overall
Life expectancy
from 65 to 78
years.

CONCLUSIONS
Major share of the
Labour Markets is
flooded with Expats
rather than native
nationals.

CONCLUSIONS
Export composition
shows that Oil
revenues were
covering around
80% of the entire
revenue

CONCLUSIONS

Effective growth in
the Human
Development Index
(HDI) of the GCC
countries is clearly
seen.

THANK YOU