ABSTRACT

This chapter attempts to analyse the ‘oil revenues of the Gulf Emirates: pattern of allocation and impact on economic development’. The few differences may be explained by ‘time lag’ as each Emirate in turn reached a particular stage of development in its social, economic and political institutions. The factors determining the allocation pattern of oil revenues were traditional and political forces, rather than economic considerations. Unless the Emirates alter their traditional approaches, the huge increases in revenue will be expended through widening the existing channels of expenditure. The Emirates can easily avoid pouring the new increase into the endlessly growing channels of transfer and expenditure, and can alter their traditional approach to a development-oriented one. They are asked to grasp this opportunity and reform their financial policies to promote production instead of subsidizing consumption. A need for a development-oriented approach to utilize oil wealth is apparent, if the Emirates are going to sustain economic development.