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Introduction

GCC countries share a common vision for economic development, set out in national development plans that highlight the need for diversification of the productive base to reduce dependence on the hydrocarbon sector and to create more employment opportunities for young and growing populations. National development plans have a long history in some GCC countries as a means of setting out development objectives, particularly following the lows in oil prices in 1998-99. All of the latest plans emphasize economic diversification and an increase in the labor force participation of nationals.

Most plans stress the need to boost productivity and competitiveness, and include promotion of a business environment conductive to growth. Targeted areas also include integrating economies with the global knowledge economy, encouraging entrepreneurship, attracting foreign investment, fostering innovation, and ensuring access to finance for small and medium-sized enterprises (SMEs). Other themes focus on recognition of the need to improve education and health outcomes, and the desirability of improving the efficiency of the public sector.

Alternative source of income:

The Gulf countries are competing to find alternative sources of income to replace oil in order to strengthen their economy and develop other sectors such as education and health sectors. Saudi Arabia,Qatar, and Kuwait have declared their economic strategies until the year 2035,and intend to enhance investment opportunities in different sectors such as transportation,housing,education and allocate higher budgets for the development of infrastructure and human resources.

Kuwait Vision 2035

The Government is keenly aware of the perils of reliance on oil (an exhaustible resource) for sustainability of the country’s economy.it has therefore launched a long- term policy vision under the banner of “Kuwait Vision 2035”. The main planks of this vision can be summed up as follows:

1-Recovering the pioneering regional role of Kuwait and transforming it into a financial and trade center, attractive to investors, where the private sector plays the lead role in economic activity creating competition and promoting efficiency; with supportive national governmental institutions providing adequate infrastructure, appropriate legislative framework and an inspiring business environment;

2-Providing climate for balanced human development, safeguarding social values and national identity, preserving the community’s values and its Arab and Islamic identity;

3-Strengthening the democratic system, respect for the constitution, and promotion of justice, political participation and freedom;

Strategic Aims

Within this vision, the 6-pronged strategic aims of development till 2035 are:

(1) Increasing the GDP and raising the citizens’ standard of living by

(a) Increasing non-oil growth to improve citizens livelihood;

(b) Diversification of production base through financial, commercial and services sectors (in particular the transport sector), without neglecting the other sectors;

(c) Strengthening financial institutions’ competitiveness, diversifying investment and financial instruments of the capital market;

(d) Improving oil sector performance and increasing its interrelation in the national economy- particularly the petrochemical and technology industries of high added value;

(e) Reforming and developing general budget structure to promote non- oil deficit reduction;

(2) Maintain economic stability and justice in the distribution of national income stimulating mechanisms including the following:

(a) Diversification of property structure by gradually reducing the participation of public sector, encouraging increasing private sector role especially that of small and medium enterprises;

(b) Privatization of state – owned enterprises;

(c) Elimination/reduction of administrative and regulatory obstacles;

(d) Facilitation and simplification of investment procedures;

(e) Completion of on- going infrastructure projects, and realizing integration and cooperation of private sector for new projects by encouraging participation of small and medium enterprises;

(f) Creating an appropriate environment to attract foreign investment, including by encouraging participation between foreign and local companies;

(3) Supporting human and social development through the following:

(a) Promotion of education and training, and research;

(b) Improving skill levels of indigenous population;

(c) Securing improvement in the quality and productivity of expatriate workforce;

(d) Promoting the observance of human rights and, in this regard, preserving Kuwait’s reputation in adherence to relevant international conventions;

(v) Enhancing and improving the effectiveness of government administration by:

(a) Increasing transparency, accountability and honesty of administration;

(b) Restructuring the administrative machinery and improving the delivery of public services including through electronic means;

(c) Modernizing the collection and dissemination of data and information, and supporting the development of information society;

(4) Consolidating the Islamic and Arab identity:

(a) Preservation of Kuwait’s Islamic identity and the stat’s Arab orientation, in accordance with the dictates of Kuwait’s constitution;

Criticisms of the Plan

In an article entitled “What is the Opinion of Businessmen of the Kuwait Vision 2035?”, there was a shared view that the the development of the human element is significant because it is the “permanent wealth” of the country. Also, the plan lacked an executive agency to carry it out and the absence of an auditing control system. of the country. A businessman thinks that the Kuwait economy is like a “ship sailing in rough seas with no captain to lead it”.`This calls for the establishment of a higher economic council to manage the economic conditions of the country. The reliance on oil is a weakness, and hence the need to develop new sources of income. He considered that there are two pillars to the economy:continuous education and the private sector.

Questions:

(1) Can the goals of the economic plan be achieved? Are they realistic?

(2) Do you think that the requirements for accomplishing the stated goals of the plan exist?

(3) What is needed to achieve the goals of the economic plan?

(4) If the price of oil reaches up to 100 per barrel, do you think that the plan needs to be amended?

Appendix:

Empirical literature on development plans

1-An empirical research paper on South America’s long-term economic growth suggests valuable lessons for South American growth. First, physical and human capital accumulation are necessary conditions for boosting long-term growth. Economic growth is stimulated in conjunction with foreign investment by higher levels of secondary education. The profitable effects of growth via FDI come through higher efficiencies from a combination of advanced management skills and technology spillovers.

Second: favorable political institutions are an important factor for income growth, since they stimulate productivity as well as attraction of capital. Both institutional quality and constraints on executive power have a positive impact on growth. Political and institutional structure also affect foreign investment. Rule of law and the financial institutions credibility indicator (contract-intensive money) raise the attractiveness of South America for overseas investors.

(1) Daniel. H. Vedia-Jerez and Coro Chasco, Long- Run Determinants of Economic Growth in South America.

2. The Role of Administrative Quality on Capital Accumulation and Structural Reforms:

Administrative quality is an essential dimension of governance institutions. This variable indicates the ability of government to deal with investors and to provide them an environment which is suitable for capital accumulation.

This variables representing the administrative quality include: (a) Control over Corruption (b) Quality of Bureaucracy, (c) Investment Profile, and (d) Law and Order”.

They are important determinants of capital accumulation and structural reforms in developing countries. They reduce the uncertainty and costs of doing business. They also help improve financial development given that in countries with better administrative quality features, the financial credits are better channeled for more productive investment projects.

. Corruption is most common in the developing countries and emerging economies and causes economic, social, political and legal problems. It is unfavorable for the growth prospects of developing countries and can lead to inefficiencies and inequities in the developing countries. It is also an obstacle for both social and economic development.

The “Quality of Bureaucracy” summarizes the ability of the government to formulate and implement sound policies. Countries where the bureaucracy has the strength and expertise to govern without extreme changes in policy or interruptions in government services. In these low-risk countries, the bureaucracy tends to be rather autonomous from political pressure and to have an established mechanism for recruitment and training. “Quality of bureaucracy is strongly related with the level of corruption and legal order.

Ahmet Faruk Aysan and Mahmut Satuk Bugrahan Budak, Administrative Quality, Structural Reforms, and Capital Accumulation in Developing Countries.

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