Challenges of the Arab Gulf States

Introduction

Considering the current dept crisis facing most of the Arab Gulf States, a constructive engagements would be very helpful for acceleration of economic growth as well as that of the dependants who are mainly the developing countries benefiting from oil exports or the wide range of products and machinery. The credible factors the Arabs Gulf States ought to address urgently include the reputation ruined by the oil wealth or property sector such as the real Estates.

The creditors of these states require equal treatment for a positive impact to the already experienced market uncertainties. This calls for urgent and regular communication with the creditors and investors with the aim of gaining orderly and timely solutions. Never the less, there has been some positive effects to the Gulf States considering the wealth they have acquired from the oil exports.

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This paper discovers and addresses some of the challenges facing the Arab Gulf States in close relation to their sovereign wealth from the oil production. Particularly the issues relating to foreign workforce and its effects to Arab states as well as its beneficiaries, labour markets, effects of the segmentation of the markets, the cultural challenges or gains and the major effects to the educational requirements, expectations or current trends.

Sovereign funding

Today there is a great debate concerning the autonomous capital funds from the oil wealth states as sovereign investment whose argument is that this can cause harm to the long-term competitiveness among the western communities. Investments results to exposure towards the financial risks such as the current market crisis. This equally translates to decrease in assets values. Some of these states are experiencing surplus capital requiring sustenance for a secure and practicable prospective economical growth.

Job markets

The Gulf States have recently been the largest markets or best choices for most Arab and Asian job seekers. The governments of some of these Asian countries encourage migration as a measure to ease pressure associated with labour markets, to reduce the unemployment rates as well as accelerate economical development. It is the most dynamic and well-established method regarded as one of the most efficient measure for curbing the alleviating poverty levels among most developing nations. (Nassar and Ghoneim, 32)

Migration

Oil wealth has attracted many immigrants into the Gulf States in search for better paying jobs especially among people from other developing countries. This a big challenge the Gulf States faces today and in future because major analysis show that the economy growth mainly relies on the labour forces of which majority is delivered by imported foreign employees.

Reliability on such is evidently a huge mistake since it’s a breaking entity considering that majority face deplorable conditions, little or no rights and little pay. They remain tentative for better offers.

According to Kadragic and Walters, (6) there is uneven distribution of income among the citizens in majority of the Gulf States such as among popular wealthy emirates clusters in Abu Dhabi and Dubai. The potential economical growth may also be under threat of degradation due to scarcity of the basics requirements such as water or the environmental degradation.

Culture

The Gulf States are both Arab and Muslim states and have a governance system whereby the inheritances of political and social norms are governed by the cultural procedures. Despite these traditional characteristics, the oil wealth has led to drastic changes over cultural outlook, styles or the living criterions. Although the system faces some setbacks over improvement, alterations in appearance are quite evident far from the traditional form of governance that existed before oil prosperity.

The states have experienced some similar transformation procedures to higher standards of living although it is argumentative that, there are minimal efforts to achieving the standards due to availability of resources.

According to Fox, Mourtada-Sabbah, and al-Mutawa (40) “Gulf nationals have vigorously developed quite luxurious lifestyles while producing few goods exportable to other regions of the world except for petroleum products” the current trends taken by the governments ensures battling of idleness as a measure of ensuring high quality lifestyle for the citizens. The imports are equally supportive to the Gulf States citizens.

They are able to acquire modern clothing and electronics that are up to the current fashion trends. The advancement in the Information Communication Technology has equally been fully embraced thus making the States more marketable and economically viable.

Gender equality

The labour market faces a big challenge of under representation of women. Liberal governance fights for equality and poses as a huge challenge regarding participation of women among most Gulf States due to their cultural believes and styles of leadership that existed before.

The existence of the high quality education locally enables women who in most cases are not in a position to travel away due to some cultural regulations to study and enjoy the same rates as their counterparts. The existence of such institutions also causes some positive and healthy competition to the local universities thus making then to improve their services.

Women make up majority of the university’s population in Kuwait, Saudi Arabia and Bahrain. (Pollock, 9) there is no gap difference in gender participation in majority of the Gulf States and this posse as a great future substantial democratization advantage. (Fish, 34)

Education

The widest sense of belonging indicates that presence of wealth requires good formal education for people to be in a position of managing the basic resources or infrastructure, establish some healthy living codes that are well set-up and rooted. Such codes are able to adopt a moral, economical, social and political ethical way of working.

Today it is evident that majority of the young generation in the Gulf States are spoilt for choices regarding education, employment and financial security. The argument behind the education sector entails the adequacy especially while preparing for need to face modernization in the job markets.

Are the graduates well equipped with the requirements to combat current and future needs? The challenge some researchers may pose ascertain that the oil wealth may have created a situation whereby there is little or no demand for the educated and many citizens have a good living standard because of participating in foreign businesses as native silent partners. (Kadragic and Walters, 5)

In this context, the results would be a status of inactivity or encumbering anti-entrepreneurial situation that can effortlessly be conquered and those involved are accustomed to luxurious lifestyles of little hard work (5).

The wealth has nevertheless bought about some young and highly talented and widely learned population. Majority of the youths are now completing their secondary school courses and in countries such as the south Arabian have more women graduating compared to men. There are more people entering the labour markets than before. The administrators have begun to understand that even for the wealthiest states, the foreign labour forces sacrifices its loyalty.

There is more need for ensured dignity among the youth and thus the evident presence of real and purposeful jobs unlike the foreign labour force that shifts the focus away from the education, work ethics and quality in the aim of achieving high outputs. The global competitiveness of a job involves high productive citizens, thus the current trends of highly educated citizens especially youths and women. People are in a position to acquire more skilful information for better efficiency.

There ere are some clear realities regarding the future of most Gulf States today. There are need to diversify the economy and engage the private sector as a way of generating more finances and real jobs than the oil sector can support.

The Gulf States have also realized the need to ensure the citizens acquire the role of guiding the future of the nation. This ensures the education is actively practiced to enhance economic growth of a State. The education system is ensuring the citizen play the true role of democratic governance.

As Haass would put it (137), the importance of education is shown by an articulated and well informed community with the ability of promoting democratic reforms. The literacy rates have risen in the Arab World but a big challenge is the need to ensure preparations brings success to the global economy. The aspect of memorization and existence of systems that are reinforcements for prejudice and biases against women and other minorities ought to be curbed. (Rubin, 67)

There have been tremendous achievements on modernizing the education systems in some Gulf States for instance Qatar, which has huge investments in the sector to bring in some American local University branches such as Cornell and Virginia Universities among others. (Miles, 16) they are government sponsored institutions to assist the local students avoid the hustles of having to travel and study abroad.

In order to meet the highly modernizing populace, the Gulf States are acting rapidly on the education sectors to ensure world class potential for competition as well as ability to foster changes among other countries. For instance, there are more establishments like to polytechnics to cater for vocational training, Oman has established Information Technology schools, research and business centres thus establishing the States as the best choices for IT studies. Kuwait is in partnership with the UNESCO as a measure of refurbishing its secondary schools. These have been a great way of appreciating the role played by the education sector.

Vulnerability of economies

Investor confidence

The international investor confidence remains dented by most of the states thus lowering the value of equity, risk basic coverage and any future access to international markets. The main challenge is that, when the risk repulsion is high among traders, the conditions for acquiring credit become more restricted. Financial losses have a huge impact to the overall country’s balance sheets to the household level. These consequences require the support of the International Monetary Fund or the World Bank assistance.

The support from these international financial institutions acts as a prevention or resolution facility that entails flexibility on the credit offers as per the urgency of the needs. Recently, studies indicate some “social, environmental, industrial, labour market, and governance issues as factors influencing economic engagement of a country.” (Mody et al, 3) Surveillance over such regionally designed policies assists in barring regional economical consequences.

The state faces a challenge of establishing a well-enhanced security that ensures expansion of the capital markets. They many find the need of establishing financial relationship with financial supportive bodies. The IMF and World Bank are financial institutions with the ability of facilitating expansion and balancing growth of the trade by encouraging the use of convertible currencies. At present it is rare to find discrimination of currency among member countries because of such engagements.

Managing the challenges

The challenges facing majority of this Arab Gulf States mainly gets an exposure in terms of the historical events that contributed to conflicts, high power penetrations or undemocratic nature or governance, lack of education for its people, unequal representation on the workforce, immigration and investors confidence among others.

The recent rates of success in addressing some of these issues have come about because of some policies resulting from a multitude of ideas depicted mainly by external forces offering conservative, liberal, optimistic and pessimistic proposals.

The availability of resources turns to be dangerous because in some cases it promotes religiosity and idleness. In most wealth settings, the dependants try to base their dependence on the wealth as opposed to knowledge. The challenge the States have to face is the excessive strains from the developed states which adopt similar educational styles that are not progressive in resource acquisitions.

The nature of a government and its future endeavours depend solely on the treatment of the citizens. The oil wealth in the Arab Gulf States ought to have provision for freedom, security, dignity and wealth to the citizens as a measure of improving the lives. They have to be entrusted into pulling back for the growth of a nation through provision of labour force or services. Since the emergence of the oil wealth, there have always emerged tacit bargains concerning the leading regimes and the citizens.

The administrations controls the wealth brought about by the oils and the state as well, but shares the wealth with the citizens. The government has to provide for the welfare status of the citizens depending on the amount earned and the levels of achievements. The citizens today are entitled to the housing facilities, health, education, services government job openings and other subsidies.

The challenges expend by this kind of offers stand on the contribution of the citizens. The citizen becomes a passive consumer instead of a contributor to the nation. There are immense needs for the unearned wealth as a future building block. There might be lack of a positive social revolution towards economical growth and future expansion plans.

Although the government of such States may be in a position of engaging resources to withstand such welfare status, such a collapse is a failure in the social settings. Leaders must acknowledge that the future endeavours of the country depend solely on the citizens. The oil wealth is from the non-renewable sources and this is a main reason why they cannot keep up with the current population growth rates.

Today all the Gulf States need to secure their oil wealth by engaging in free markets, enhancing privatization or growth of any related private sector, and encouraging both foreign and domestic investments. To keep up a patriarch bargain, the government ought to ensure proper support to the strong private participation because the oils or gas exports cannot ascertain the growing demands.

Conclusion

The biggest challenge facing the Gulf States entails establishing stable and well-developed foundation to counter the impact of current market inflation rates on the state’s economy. As major oil exporters, the Arab Gulf States would have a stable and powerfully built economy supporting many dependants particularly the developing nations. They would also be an influence to other sectors of the economy such as the tourism industry besides being a chief key energy resource supplier.

The concern of the financiers probably inclines on the issue of oil prices, which is a global concern. Stable oil prices are only achievable when the economy is stable and growing without any political or social concerns. This can be the basis for cooperation between the states and financial advisors. In relation to conducted research over the effects that can occur due to collapse of the oil wealth states, the major consequences would befall other economies especially those of the developing countries.

Works cited

Fish, Steven. “Islam and Authoritarianism.” World Politics. 55, 4-37. 2002. Print

Fox, John W., Nada Mourtada-Sabbah, and Mohammed al-Mutawa. “The Arab Gulf Region: Traditionalism Globalized or Globalization Traditionalized?” In Globalization in the Gulf. New York, NY: Routledge, 2006. print

Haass, Richard N. 2003. “Toward Greater Democracy in the Muslim World.” The Washington Quarterly. 26:3, 137-148.

Miles, Hugh. Al-Jazeera: The Inside Story of the Arab New Channel that is Challenging the West. New York, NY: Grove Press, 2005.

Pollock, Michelle. “Qatar: A Model for Education Reform in the Arabian Gulf.” World Education News and Reviews May 2007. Web Accessed December 27, 2009

Rubin, Barry. The Long War for Freedom: The Arab Struggle for Democracy in the Middle East. New Jersey: John Wiley & Sons, 2006.

Walters, Timothy N., Alma Quadratic, and Lynne M. Walters. “Miracle or Mirage: Is Development Sustainable in the United Arab Emirates?” The Middle East Review of International Affairs (MERIA). (September) 10:3. 2006

Mody, Ashoka. Kletzer, Kenneth, and Eichengreen, Barry. J. “The IMF in a world of Private capital markets”, International Monetary Fund: European Deptment. International Monetary Fund Publishers, 2005

Nassar, Heba., and Ahmed Ghoneim. Trade and migration. Are they complements or substitutes: A review of four MENA countries. Cairo: Center for Economic and Financial Research and Studies, Cairo University. Mimeographed., 2002

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