{"id":6286,"date":"2011-04-24T04:22:59","date_gmt":"2011-04-24T00:22:59","guid":{"rendered":"https:\/\/mideastposts.com\/?p=6286"},"modified":"2011-04-24T04:22:59","modified_gmt":"2011-04-24T00:22:59","slug":"entrepreneurs-privatisation-the-future-for-gcc-growth","status":"publish","type":"post","link":"https:\/\/mideastposts.com\/middle-east-business\/middle-east-economics-analysis\/entrepreneurs-privatisation-the-future-for-gcc-growth\/","title":{"rendered":"Entrepreneurs & Privatisation: The Future for GCC Growth"},"content":{"rendered":"

\"\"<\/a>In my column last\u00a0week<\/a>,\u00a0I voiced concern over the sustainability of the expansion of the Saudi\u00a0welfare state vis-\u00e0-vis its new, significantly higher, oil target price\u00a0($100-$110 by 2015) required to balance its budget.<\/p>\n

While the rest of the GCC states may well balance their budgets at lower oil\u00a0prices, the conversion of Saudi’s oil strategy into a more hawkish one \u2014\u00a0similar to those of Iran, Venezuela and Algeria \u2014 will definitely intensify\u00a0the geopolitics of oil.\u00a0In short, with the exception of Oman and Bahrain (the GCC’s non-Opec\u00a0members), the rest of the GCC now also operates in a higher oil economy.\u00a0Ironically, they are both the beneficiaries of the recent Gulf Development\u00a0programme.<\/p>\n

Curiously enough, the Saudi oil minister said on Monday that the oil market\u00a0was oversupplied. This was followed by Opec’s secretary general noting that\u00a0there was a $15-$20 fear premium as the regional unrest is priced in.\u00a0As oil continues to constitute a significant component of the GCC’s GDP,\u00a0higher oil prices seem to be the only way forward in sustaining economic\u00a0development and staving off social discontent.<\/p>\n

But as argued last week, this puts the GCC’s economic growth requirements in\u00a0direct conflict with the needs of the world’s net-consumers of oil. This I\u00a0believe will further accelerate the drive for alternative and renewable energies.\u00a0It is for this reason that the Gulf must find new ways of addressing its\u00a0populace’s socio-economic needs. I believe the solution is a combination of\u00a0stimulating entrepreneurship, privatising non-core sectors and developing\u00a0world-class soft and hard infrastructure.<\/p>\n

Entrepreneurship, often viewed as a makeshift descendent of Corporate Social\u00a0Responsibility or public relations, continues to baffle and spook public\u00a0officials.\u00a0After all, how can a college kid be smart enough to start a small business\u00a0that can eventually develop into a supranational company \u2014 that seems to not\u00a0only discount, but even dismiss, the role of the government.<\/p>\n

Combination of factors<\/strong><\/p>\n

A combination of these concerns makes governments fairly antagonistic to the\u00a0spirit of entrepreneurship. The reality however is that entrepreneurs aren’t\u00a0interested in competing with governments, let alone undermining them. If\u00a0anything, entrepreneurs are in constant intellectual competition with\u00a0themselves.\u00a0Many have damned privitisation as the free market’s most evil innovation.<\/p>\n

But to disagree with the notion of privatisation (the process of\u00a0transferring ownership of a public service from the government to the\u00a0private sector) is to disagree with Adam Smith’s notion of competitive\u00a0advantage.<\/p>\n

Just like some countries can provide specific services and products better\u00a0than others, so can the private sector. What many have been upset with all\u00a0along is the governments’ ill-advised execution of privatisation deals.\u00a0Privatisation is also criticised for increasing the cost of living.<\/p>\n

Again this is true when it is done in esoteric isolation and is not part of\u00a0broader economic reform plan that would increase\u00a0 society’s income\u00a0generation. In other words, you can’t have more competitive services without\u00a0having a more productive population.<\/p>\n

Better education<\/strong><\/p>\n

Privatisation shouldn’t be pursued by governments just to relieve themselves\u00a0of cost burdens but to also allow for those freed funds to increase the\u00a0population’s general productivity through better education and vocational\u00a0training.<\/p>\n

Finally, an investment in soft and hard infrastructure would allow\u00a0entrepreneurs, privatised public interests and foreign investments to\u00a0operate in an environment that is both safe and competitive.\u00a0Dubai has been an example of how investment in infrastructure has gone along way to ensuring its competitive advantage as a place to do business.\u00a0However, improved education, research and health-care services continue to\u00a0be a challenge for the Gulf as a whole. Equally important is the lack of\u00a0dynamic regulatory institutions and a sophisticated judiciary.<\/p>\n

For all their fears of free markets running amok, GCC governments must\u00a0recognise that loss of ownership doesn’t necessarily mean total loss of\u00a0control.\u00a0If anything, they should prefer to have the private sector grow GDP while\u00a0they stimulate and regulate that growth as needed.<\/p>\n

Efforts to continue to own and operate most of the economic engines will\u00a0only stifle innovation and serious diversification, thus keeping us firmly\u00a0dependent on oil for the foreseeable future while the rest of the world is\u00a0trying to move away from it as fast as they can.<\/p>\n","protected":false},"excerpt":{"rendered":"

MISHAAL AL GERGAWI: The GCC is at a crossroads – its growth requirements are in direct conflict with the needs of the world’s net consumers of oil. <\/p>\n","protected":false},"author":185,"featured_media":6288,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,4],"tags":[18328,18303,197,18299,18312,5800,6462,18306,406,18338,3587,566,5329],"_links":{"self":[{"href":"https:\/\/mideastposts.com\/wp-json\/wp\/v2\/posts\/6286"}],"collection":[{"href":"https:\/\/mideastposts.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mideastposts.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mideastposts.com\/wp-json\/wp\/v2\/users\/185"}],"replies":[{"embeddable":true,"href":"https:\/\/mideastposts.com\/wp-json\/wp\/v2\/comments?post=6286"}],"version-history":[{"count":0,"href":"https:\/\/mideastposts.com\/wp-json\/wp\/v2\/posts\/6286\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mideastposts.com\/wp-json\/wp\/v2\/media\/6288"}],"wp:attachment":[{"href":"https:\/\/mideastposts.com\/wp-json\/wp\/v2\/media?parent=6286"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mideastposts.com\/wp-json\/wp\/v2\/categories?post=6286"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mideastposts.com\/wp-json\/wp\/v2\/tags?post=6286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}