Oil revenue of the Arabian gulf Emirates: patterns of allocation and impact on economic development

Abstract

The study aims to analyse the oil revenue, its allocational pattern and impact on economic development in Kuwait, Bahrain, Qatar and the UAE from the commencement of commercial oil production to the end of 1970. Chapter I, briefly presents the geographical features, discusses the economic activities and fiscal policies of the pre-oil period, and outlines the evolution of the Sheikhdom political system, pinpointing important factors still influencing the utilisation of petroleum resources and oil revenue. Chapter II, discusses the petroleum industry's development, importance, potential, and non-revenue impact on the local economies. Chapter III, assesses the actual oil revenue received, discusses factors influencing it, and explores relevant considerations for an optimum level of oil revenue. Chapters IV-VII, explore the allocational trends and patterns of the oil revenue in each of the Emirates, (the oil revenues examined represent about 88% of the total received in the period studied). A model, built to investigate the allocational patterns provides the basis for deducing the contribution of the oil revenue to different items through assessing the public revenue, expenditure and reserve. Chapter VIII brings together the findings of Chapters IV-VII, confirming an overall allocational similarity. A major and increasing proportion of the revenue goes on current and transfer expenditure. An exploration of underlying influential and determining factors takes up the greatest part of the chapter. Chapter IX examines the desirable relationship between oil revenue and economic development, notes the improvement produced in some aspects of the economies, in the social services, the standard of living and consumption. It also shows the limited impact of the oil revenue on structural change and prospects for sustained development, and discusses some problems impeding progress. In conclusion the need for alternative approaches is discussed together with considerations relevant to a development-oriented approach.