Economic shift

The oil windfall in the Gulf States has rapidly changed the economic landscape, as well as the demographics and societal make-up of the region.

Production of oil has had a knock-on effect on economic development, firstly through development of an oil and gas services sector, and later of petrochemicals and energy- intensive industries. A significant tertiary services sector has also grown in recent years to support industrial development, while economic diversification strategies have also promoted the travel and tourism sectors and knowledge-based industries.

An increasingly diverse economy has created far-reaching employment opportunities that span beyond the Gulf States. A flow of immigration, which began in the 1950s, has gathered pace over the last two decades and non-national residents from across the world now comprise the majority in the region which, while retaining a proud Arab heritage, is increasingly multicultural in nature.

On the economic front, enormous efforts have gone into the construction of transport and communications infrastructure. Port installations have been a major area of development, including oil and gas terminals, multi-trade ports and specialised container ports. Developing the region s airports has also been a major focus, with Dubai, Qatar and Abu Dhabi all becoming major global hubs, partly due to rapid development of the region s ambitious airlines. Today the region also boasts highly efficient communications networks, which have been essential for integrating the Gulf into the global economy, but this also constitutes a key factor for regional integration.

The development of an industrial sector has also become a central objective. The countries have invested heavily in the petrochemicals industry and in high energy-consuming industries such as steel, aluminium and cement. The GCC accounted for about 13 percent of global aluminium production in 2013, and capacity is expanding thanks to new plants at Ras Al Khair in the Kingdom of Saudi Arabia, and in Abu Dhabi, which will be among the biggest integrated aluminium smelters in the world.

The region has also had to make important financial decisions and in particular, how to best deploy the surplus revenues from hydrocarbon exports. This not only means preparing for life after oil , but also dealing in the present day with the fact that the Gulf economies are excessively vulnerable to fluctuations in the price of oil.

In 2011, oil revenues provided over 80 percent of the export earnings of the Kingdom of Saudi Arabia, Kuwait and Qatar. This was not so much the case in the Kingdom of Bahrain and the United Arab Emirates, where oil typically accounts for less than half of export earnings, highlighting the extent to which these countries have already managed to diversify their economies.

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