Analysis of the Impact of the Cultural and Institutional Characteristics of the Gulf Cooperation Council States on Entrepreneurship: Opportunities and Challenges

Abstract

The Gulf Cooperation Council (GCC) states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) have achieved dramatic developmental and economic growth since the discovery of oil in the 1950s. They have been exceedingly successful in transforming their economies from ones that, prior to the discovery of oil and gas, relied merely on fishing and pearling to ones that are state-led, modern and service-driven. The governments of the GCC states are displacing the rentier state model as the general developmental trajectory and gradually shifting toward market liberalism, economic openness, a pro-business environment and an embracement of globalization. All of this has been achieved in an attempt to establish pillars of sustainable economic growth, a decrease on the dependence on oil revenues, and eventually a reduction of the scope of government and a limit on its role in the economy. However, numerous governance and institutional challenges accompanied the rapid economic and developmental achievements of these states. Over-reliance on oil revenues has made the fate of these states’ economies dependent on oil markets. The dramatic plunge of oil prices in the second half of 2014 served as a reminder of the importance of economic diversification to avoid sharp fiscal deficits in the years to come.