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According to the National Bank of Kuwait (NBK) GCC Brief issued on August 5, "GCC economies have managed to escape the fallout of the global economic and financial crisis at a relatively low cost." Indeed, bank failures such as Al Gosaibi/Saad in Bahrain did not happen on a large scale and liquidity dry ups in interbank markets were effectively eliminated by central bank measures.
Nevertheless the GCC is only at the beginning of its transformation to a competitive economic block, which does not rely on carbon energy but on a diversified industry, run by a well-educated work force.
While education is best measured in privately owned firms, public entities judge performance differently since they are run by the state - and the state cannot go bankrupt. With two thirds of GCC nationals being younger than 30 years, it is evident that this model has little perspective. "Clearly, the ability of the public sector to absorb new entrants into the labour force will be increasingly limited in the future," states the report.
Encouraging steps being taken
Positive steps in order to tackle the skewed employment allocation should not be ignored. Dubai has created a number of initiatives aiming to improve the level of education. Clusters like Knowledge Village, Tecom or Dubai Academic City attract students not only from the GCC in various disciplines. Leading business schools such as the London Business School or INSEAD from Fontainebleau have in recent years set up branches in Dubai and Abu Dhabi, respectively.
The government of Kingdom of Saudi Arabia, which saw the listing of Knowledge Economic City at its Tadawul stock market a few weeks ago, passed a budget of $385bn which will be invested in the education sector over the next five years. The Riyadh-based King Abdullah University of Science and Technology (KAUST), where only English is spoken, was opened in September 2009 and targets a top position among world education bodies. "So far no Arabic university is among the Top 500 universities, this has to change", says Ali Al-Shihabi, chairman of Dubai-based Rasmala Investment Bank.
Saudi leading the way
The World Bank's Doing Business index puts Saudi Arabia top of the GCC. These indicators measure the ease of doing business pertaining to the following aspects: starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and closing a business. As NBKs analysis states: "Saudi Arabia is the leader in terms of the attractiveness of its business environment followed by Bahrain, while Kuwait and Oman are the least desirable places to do business. The UAE and Saudi Arabia have both managed to improve their ranking notably over the last 5 years, rising by 36 and 25 places, respectively, in spite of the fact that the number of countries surveyed has risen by 28."
