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Volume :13 Issue : 50 1987      Add To Cart                                                                    Download

TOWARD A UNIFIED REGIONAL INDUSTRIAL STRATEGY: THE CASE OF THE G.C.C.

Auther : By: Dr. Morris Girgis and Dr. Nizzar Al-Rabei

           The paper aims at identifying a regional strategy for industrial development in the Gulf Cooperative Council (GCC).  GCC consists of Saudi Arabia, Kuwait, UAE, Qatar, Oman and Bahrain.  A strategy is defined as a process, which purports to select the benefit-maximizing option available to the GCC, subject to the prevailing social-economic constraints and in accordance with existing and potential factor endowments.  It is important that the proposed industrial strategy be compatible with also be translatable into an operational plan at a later stage.

           One of the compelling reasons to seek a unified industrial strategy is the need to diversify the sources of income in all six countries.  Because of the potential gains from economies of scale in both production and consumption as well as from external economies, a unified industrial strategy is also likely to provide larger benefits to each country as compared to pursuing industrial development in isolation of the other member states.  In addition, growth via industrialization in the GCC is likely to ameliorate the prevailing structural imbalances, in consumption, employment, foreign trade and real wages among others.

           The major objectives of the regional strategy are summarized in reducing reliance on the oil sector, investing oil revenues in income-generating capital assets at home, enhancing self-reliance in the region, correcting structural disequilibria and increasing the number of national working in the manufacturing sector.  The available resources consists of:

 (i)                natural resources (oil, gas, agricultural, fisheries, solar, mineral, etc;

(ii)             capital (foreign reserves, infrastructure, industrial capacity, etc; and,

(iii)           human resources (local workforce, expatriates, educational levels, etc).

 As for constraints, they vary from the wage structure, consumption patterns and limited market size to the dominance of commercial mentality in the region.

          The proposed strategy discusses six options, each of which consists of two to three alternatives.  The options relate to factor-intensity, choice of technology, size, ownership, stage of manufacturing and the targeted markets.  The proposed strategy is set in three temporal stages:   

The first starts with selecting the least-cost combination of “strategic” industries, e.g. military, medical or food-security related industries.

The second suggests export-oriented industries, based on unambiguous comparative cost advantages (e.g. factor endowments, location, etc).

The third, which is to move parallel with the previous stage, envisages the expansion of import-substituting industries in the consumer-goods sector.

 To this end, a number of base-line studies are suggested with emphasis on ways to increase the number of local workers in industry, to optimize industrial incentives, to enhance labour productivity and to uplift the socio-economic standing of involvement in industrial production.

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