ABSTRACT
This chapter explores some of the effects of oil on development in greater depth, and examines the extent and nature of recent developments in the Gulf states. It focuses on the phenomenal rise of the Gulf Cooperation Council (GCC) economies, which now produce nearly two-thirds of the Arab region's Gross Domestic Product. The chapter compares the GCC's development performance to that of the resource-rich labor-abundant countries in order to explore the reasons for the differences. It argues that the two governance configurations have affected state autonomy, state capacity, and social development differently, leading to different development outcomes. The chapter shows how oil revenues complicate economic management and possibly depress economic growth. It reviews a unique feature of the GCC economy: its massive import of labor from the global market—more than one-third of the GCC population is made up of expatriate workers. The chapter examines the sustainability of the GCC developmental model and discusses how it may evolve over time.
