ECONOMIC CHALLENGES OF THE GULF ARAB COUNTRIES: THE IMPACT OF DUTCH DISEASE

Abstract

In the 20th century, oil became a strategic raw material in the global economy, which led the Arab Gulf states to become heavily dependent on the export of energy resources and the income generated from them. An analysis of their revenues from 1995 to 2024 shows that more than 60% of total income in these states derives from energy-resource exports. An analysis of the Gulf Arab economies demonstrates that, despite substantial efforts, the overall economic structure has not undergone major transformation—with the notable exception of the United Arab Emirates.

Economic diversification has also become a key priority in the Arab Gulf states. As a result, industrial sectors linked to the energy industry were developed. The construction sector received increased attention, and national development strategies and economic visions were introduced, aiming to expand the service sector and diversify exports. These national visions placed strong emphasis on environmental protection and human social development.

However, the economies of the Arab Gulf states remain vulnerable to military crises and international shocks. Prior to the Iran–Iraq War, Iraq was the world’s second-largest oil exporter among OPEC member states, but it lost this position at the very beginning of the conflict and subsequently faced significant economic challenges.