Life after Oil: Economic Alternatives for the Arab Gulf States

There have been three economic transformations of the Arab Gulf. Yet the obstacles today remain eerily similar to those of forty years ago. The first transformation occurred after the discovery of oil, variously between the 1930s and the 1960s. For the first time, what had been one of the world’s poorest regions had the means to build elements of basic infrastructure and to improve standards of living. Urban centers appeared and rulers had the means both to transform their countries’ economies and to exert greater control over their citizens. The second transformation was the result of the oil price revolution of 1973 – 4. The tripling of income set off a gold-rush atmosphere. More spending was directed at socioeconomic development and infrastructural projects than the country’s absorptive capacity could handle. Standards of living improved dramatically and new generations of educated citizens emerged. The decline in oil prices during the 1980s, though, hammered home a key lesson, namely, that prosperity and continued growth could not remain unhealthily dependent on oil income, reinforced by the fact that oil was a depletable resource — and was being depleted rapidly in some states. The third transformation was prompted by the recent spiraling of oil prices in the first decade of the twenty-first century. While the gulf states