Economic Development Challenges in the Gulf and the Need for Skill Upgrading and Technological Development

This chapter explains the general economic characteristics of the Gulf countries and strategic problems and challenges confronting economic development in the Gulf countries. This chapter discusses the impacts of oil and the Dutch disease in the structure of the labour markets and economies in the Gulf countries, discusses the strategic problems facing the labour market in the Gulf and highlights the need for skill upgrading and technological development in these countries. This chapter explains that oil has contributed to economic development in the Gulf countries. However, the heavy dependence on oil leads to serious challenges since oil is an exhaustible resource and also, because of the instability of oil prices, the revenue from oil is uncertain and volatile. Hence, economic growth and the sustainable development strategy in the Gulf depend on economic diversification, which is contingent upon availability of adequate and appropriate skills and technologies. The findings in this Chapter support the first hypothesis that the Gulf countries need to promote the local skill and local technologies to face the challenges created by the depletion of oil resources. They also need to implement the three strategies of diversification, building local technological capacity and restructuring the labour market. The results confirm part of the second hypothesis that in the short and medium term, the Gulf countries will be unable to rely on local skill and local technologies and remain heavily dependent on both foreign skills and foreign technologies at the macro level.