Can Gulf investment be a significant driver of economic development in the wider region?

Résumé du document

Countries of the Arab Gulf benefit from the high incomes they get from the mining and the selling of natural oil and gas that the ground offers them. Those high incomes, combined with their small population explains why the income per inhabitant is higher than in the other states. According to Bloomberg Agency, Gulf countries have invested more than 150 billion dollars abroad in 2009. This investment is not limited to the Middle East area, yet Gulf investments represent a huge part of global investments in the wider region. Then in those conditions, can we consider Gulf investment as a significant driver of economic development in the wider region?

Extraits

[...] Those investments were not profitable since the beginning. An adaptation time was necessary for the realization of the project and its self functioning. This way, GCC investments have now reached a kind of maturity in its investment projects, and benefits from those projects are now considerable. The surplus from the Stock Exchange is also to take in consideration, especially in Riyadh and Dubai Stock Exchange. Of course, this was the situation before the losses caused by the recent crisis. But the financial and economic crisis did not caused a decrease of Gulf investments in the region, as some could have expected. [...]

[...] Some countries in which GCC countries invest do not have a convertible currency. This represents a risk for investors: if the countries in which they have invested fall into a politic or economic crisis, the amounts involved may be blocked in the country. Gulf investors would probably be tempted to invest more in the region if they knew that their investments were safe and healthy, and if they were sure that they could repatriate the dividends easily and for sure. [...]

[...] Maghreb countries represent this way, a relatively stable and reliable economy to invest in by huge projects. Their advantages are many, and above all the geographic position, between the European and the African economic markets. But investments are also made easier by local governments' measures, which purpose is to encourage those Gulf funds to settle down in Maghreb countries. Indeed, and in the aim of countering the effects of the crisis, Maghreb governments want to diversify their foreign investments, so as to protect themselves from possible economic drifts. [...]

[...] If their investment can benefit to the development of those areas, it's even better, but this is not their priority. This is also why countries of the GCC do not limit their investment to the wider region of the Middle East. They do not want to be dependent on only one region. To limit risky economic activities and investments, they prefer to diversify their partnerships, investing not only in the wider Middle East region, but also in other countries. This way, African countries might now become a new territory of investments for GCC states. [...]

[...] Gulf investors should also invest in projects that would create local employment in a significant way, which is not the case most of the time. Investors thus prefer to employ workers from East Asia, whose salary is even lower than local workers. Moreover, even when it's not the case and when investors decide to find workers locally, the creation of employment is not that important. If the construction of the project might need hundreds of workers, the project itself, once realized, might only need twenty workers to keep functioning. [...]