Economic Dualism in the Gulf

Economic dualism in the Gulf

Descartes distinction between the mind and the body seems to have the cornerstone of today’s economic relations. With human resource gaining ground, an important indicator of economic development value of the mind and the body present interesting pictures, especially in the Gulf.

One of the defining features of the oil rich economies of the Gulf is their labour. According to a report by Moody, the Gulf countries working age population has shown an upward trend in the last 15 years[1]. However, the employment rates have not been in sync with the same. The high rates of unemployment in the Gulf has been triggered by the dual forces governing the private and public sector. As Chandra Mohan explains, the private sector is dominated wholly by expatriates while the public sector is largely operated by the locals[2]. The interesting facet of this dichotomy is the pool of unskilled labours governing both the sectors.

The labour market in this region depends heavily on low skilled and low wage earning migrant labour. A majority of cheap labour comes from the neighbouring Asian countries. While it may seem to reduce the cost of production, that is not the case. On the contrary, there seems to be a spiral of low skills leading to low productivity leading to low income which runs back to low skills. Thus, in a globalised economy that is moving towards technological development and a knowledge based economy, the Gulf has now realised the importance of nurturing a competitive tertiary sector. Breaking away from the two sector approach of the Gulf becomes critical because of two reasons. One, the underutilisation of labour. A graver challenge is presented in the second instance where the lack of economic opportunities in an area market by sectarian politics, makes arms, ammunitions and terror, a lucrative incentive. What exacerbates the situation is the sporadic oil shocks that fluctuate the economic progress of the region.
While the shift from a secondary to a tertiary may take longer than expected, especially in today’s fast paced world, it is nonetheless imperative for the Gulf states to not just make the shift, but a successful one, of they are to hold on to their reins of the resource rich economies.

A.R.Rakshitha

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