The GCC Economies in the Wake of COVID-19: Toward Post-Oil Sustainable Knowledge-Based Economies?

Abstract

The economic crisis and decline in oil prices caused by the pandemic led governments in the Gulf Cooperation Council (GCC) region to step up their diversification efforts. Prior to the COVID-19 pandemic, the Gulf Cooperation Council (GCC) countries were already striving to diversify their economies away from dependence on hydrocarbons, with varying degrees of success. Their development plans and visions aim to shift their economies away from oil and gas toward knowledge-based post-oil economies with solid and sustainable foundations. Accordingly, this paper has three goals. Firstly, it aims to present the GCC’s socio-economic features and highlight the importance and relevance of economic diversification. Secondly, it seeks to analyze the impact of the COVID-19 pandemic on GCC economies and evaluate how the pandemic spurred diversification initiatives. Thirdly, the paper aims to analyze the present state of the knowledge-based economy in the GCC region, including its strengths, drawbacks, and prospects for the future. The methodology of the paper is based on a semi-systematic literature review that includes academic and gray literature. The findings highlight that throughout the previous several decades, continuous efforts to develop the status of ICT, education, innovation, and entrepreneurship in several GCC countries have contributed to improving their international competitiveness, as seen by advancements in rankings issued by various international organizations. Furthermore, political stability, significant financial resources, and a stable credit rating provide these countries with solid foundations for future sustainable development. However, several functional, structural, and cultural factors challenge the diversification process and the shift toward a knowledge-based economy.