GCC must learn to tackle problems of growth

The relationship between economic growth rate and human resources requirements, as one of the development characteristics of Gulf Co-operation Council (GCC) economies, was discussed at the 14th forum of the Emirates Centre for Strategic Studies and Research (ECSSR).

The final session summarised the opinions discussed over three days at the forum in two points of view. The first was a call to curb the rapid growth and limit its rates at three per cent per year, as it considered that GCC countries face no problem with human resources, but the problem comes from rapid growth, which must be restricted.

The other opinion was that growth must be stepped up to develop alternative sources of revenues, especially as oil reserves are fast diminishing, and alternatives must be found quickly, while tackling problems stemming from high growth.

From an economic point of view, it is not viable for any country to curb its growth while it has the required resources to achieve rapid expansion. Otherwise, it would miss a historic and irreplaceable opportunity.

On the contrary, the main reason why some countries do not achieve high growth rate is their lack of ability to find required resources.

GCC countries have achieved massive progress in the past three decades, which resulted in a 30 to 35 per cent decline in oil's contribution to the gross domestic product (GDP), compared to 65 to 70 per cent in the mid 1970s.

At that time, some writers urged GCC states to find alternative sources of income by speeding up the development of some other sectors. Now that this occupies a significant aspect of the economic policies of these countries, some are calling for curbing high growth rates. The problem is that many people believe crude reserves will last 100 years, but a British Petroleum study suggests the reserves will last only 40-45 years, considering the global reserves and consumption growth.

The question that emerges here is: How can we find alternatives to oil in this short period while maintaining a three per cent growth rate?

We do not think it is wise to implement this, simply to avoid finding ourselves with the same growth rate 40 years from now but with depleted oil wealth.

The high growth rates in GCC countries are healthy, and the same applies to China and India, which have achieved one success after the other.

It is true that high growth rates have negative impacts in relation to foreign labour and shortage of GCC national human resources, but instead of restricting growth, we have to tackle these problems.

Official statistics show that GCC citizens make up 60 per cent of the total residents of GCC countries, but only 40 per cent of the work force, which means there is unemployed manpower.

And, while GCC women constitute half of the region's population, their contribution to the GCC work force is just 20 per cent, which indicates another waste of manpower.

This simply means that the problem is not high growth rates, but the structure of human resources in GCC countries, and the increasing gap caused by reliance on foreign labour.

The solution of curbing growth rates is the easiest, despite its irrationality. Yet, it would cause GCC countries to lose investments and suffer capital flight.

The second and harder solution is the one that will guarantee alternative sources of income in the remaining 40 years before the depletion of oil and will secure job opportunities and good living standards for future generations.

This would require tackling problems that accompany high growth rates, especially developing GCC human resources and opening job markets to GCC citizens.

The ECSSR forum witnessed discussions on many development and social issues related to the future of GCC economies, human resources and demographic structure.

Dr Mohammad Al Asoomi is a UAE economic expert.