{
  "title": "Economic Diversification in the GCC: Past, Present, and Future",
  "publication": "Staff Discussion Notes, December 23, 2014",
  "sourceUrl": "https://www.imf.org/en/publications/staff-discussion-notes/issues/2016/12/31/economic-diversification-in-the-gcc-past-present-and-future-42531",
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  "summary": "Abstract: The economies of the six Gulf Cooperation Council (GCC) countries are heavily reliant on oil. Greater economic diversification would reduce their exposure to volatility and uncertainty in the global oil market, help create jobs in the private sector, increase productivity and sustainable g",
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    {
      "heading": "Abstract / Summary",
      "content": "- The economies of the six Gulf Cooperation Council (GCC) countries are heavily reliant on oil.\n- Greater economic diversification would:\n  - reduce exposure to volatility and uncertainty in the global oil market,\n  - help create jobs in the private sector,\n  - increase productivity and sustainable growth,\n  - help create the non-oil economy needed when oil revenues start to dwindle.\n- The GCC countries have implemented many standard policies to promote diversification, including:\n  - reforms to improve the business climate,\n  - development of domestic infrastructure,\n  - financial deepening,\n  - improvements in education.\n- Despite these measures, success to date has been limited.\n- The paper argues that the “missing link” in GCC diversification strategies is realigning incentives for firms and workers."
    },
    {
      "heading": "Key Findings and Analysis",
      "content": "- Incentive imbalances currently favor non-tradable production because:\n  - firms benefit from the easy availability of low-wage foreign labor,\n  - firms benefit from rapid growth in government spending,\n  - producing non-tradables is less risky and more profitable for firms.\n- Labor market and public sector features discourage nationals from private-sector entrepreneurship and employment:\n  - continued availability of high-paying and secure public sector jobs discourages nationals from pursuing entrepreneurship and private sector employment.\n- Increased diversification requires fixing incentives for both firms and workers."
    },
    {
      "heading": "Policy Recommendations and Measures",
      "content": "- Measures to begin addressing incentive issues could include:\n  - limiting and reorienting government spending,\n  - strengthening private sector competition,\n  - providing guarantees and financial support for firms engaged in export activity,\n  - implementing labor market reforms to make nationals more competitive for private sector employment."
    },
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      "heading": "Publication and Metadata",
      "content": "- Staff Discussion Notes\n- By Tim Callen, Reda Cherif, Fuad Hasanov, Amgad Hegazy, Padamja Khandelwal\n- December 23, 2014\n- Pages: 32\n- Volume: 2014\n- Issue: 012\n- Series: Staff Discussion Notes No. 2014/012\n- DOI: https://doi.org/10.5089/9781498303231.006\n- Stock No: SDNEA201412\n- ISBN: 9781498303231\n- ISSN: 2617-6750\n\nStaff Discussion Note: \"Economic Diversification in the GCC: Past, Present, and Future\" (2014) — authors Tim Callen, Reda Cherif, Fuad Hasanov, Amgad Hegazy, Padamja Khandelwal.\n\n---\n\n Content in this bundle\n\n- Executive Summary\n  - Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/staff-discussion-notes/issues/2016/12/31/economic-diversification-in-the-gcc-past-present-and-future-42531"
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    "Authors: Tim Callen, Reda Cherif, Fuad Hasanov, Amgad Hegazy, Padamja Khandelwal",
    "Published: December 23, 2014",
    "Series: Staff Discussion Notes",
    "DOI: https://doi.org/10.5089/9781498303231.006",
    "The economies of the six Gulf Cooperation Council (GCC) countries are heavily reliant on oil.",
    "Greater economic diversification would:",
    "The GCC countries have implemented many standard policies to promote diversification, including:",
    "Despite these measures, success to date has been limited.",
    "The paper argues that the “missing link” in GCC diversification strategies is realigning incentives for firms and workers.",
    "Incentive imbalances currently favor non-tradable production because:",
    "Labor market and public sector features discourage nationals from private-sector entrepreneurship and employment:",
    "Increased diversification requires fixing incentives for both firms and workers.",
    "Measures to begin addressing incentive issues could include:",
    "Staff Discussion Notes",
    "By Tim Callen, Reda Cherif, Fuad Hasanov, Amgad Hegazy, Padamja Khandelwal",
    "December 23, 2014",
    "Pages: 32",
    "Volume: 2014",
    "Issue: 012",
    "Series: Staff Discussion Notes No. 2014/012",
    "DOI: https://doi.org/10.5089/9781498303231.006",
    "Stock No: SDNEA201412",
    "ISBN: 9781498303231",
    "ISSN: 2617-6750",
    "**Executive Summary**"
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