Economic diversification trends in the Gulf Cooperation Council (GCC) countries: opportunities and challenges

Nazar Hilal

Chapter 2 in Economic Challenges in the Gulf Cooperation Council Countries, 2026, pp 18-40 from Edward Elgar Publishing

Abstract: There are many challenges to achieving suitable economic diversification in the Gulf Cooperation Council (GCC) countries. The sluggishness of diversification in the GCC can be attributed to the significant reliance on oil and gas revenues as well as the fundamental structural economic issues that plague them. Owing to the approaching depletion and unpredictable price volatility of oil, the declining demand for it, the repercussions of climate change, the costly domestic subsidies for energy, water, and fuels, and the elevated unemployment rate. In addition to the concerns regarding economic diversification, its societal roles and values, the failure to transition to a real economy, and inadequate resilience to mentality change are impeding the pace and effectiveness of diversification initiatives in the GCC countries. This study examined the strategies and patterns implemented by GCC countries to broaden their economies, as well as the challenges they face in implementing these strategies. It analysed selected policies implemented by the Kingdom of Saudi Arabia (KSA) and Qatar as a case study. The primary objective was to analyse the factors that have limited the success of diversification initiatives. These factors highlight the pressing need to pursue this strategy, as it offers economic opportunities and promotes development in the region.

Keywords: Economic Diversification; GCC Countries; Economic Development; State Role; Private Sector; Rentier State (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035358434
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