Wilson professor of business administration at

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Unformatted text preview: dependence on foreign labor. Its elite may be incredibly rich, but the vast majority of Saudi revenues have gone to national security and the broader population, including both the poor and a steadily expanding middle class. This investment has included massive increases in key services like power and water. There has been an almost incredible expansion of education (now some 6% of the GDP), health care, and housing in the face of massive population growth. Government services have become much more effective while the barriers to private Saudi and outside investment have been sharply reduced. The Saudi national oil company, ARAMCO, has become a model merit-based employee. The Kingdom has spent billions and billions to create and expand industrial cities throughout the Kingdom, while it has opened up the rest of its economy, sought to replace foreign labor with Saudis, and begun to develop new sectors of the economy like mining and new sources of income like tourism. 124 Oil DDW 2012 1 AT: Saudi Reforms Turn 125 Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 Oil revenues are being channeled into innovation and growth independent of oil Abdelal, Joseph C. Wilson Professor of Business Administration at Harvard Business School, et al., , 08 Rawi Abdelal, Joseph C. Wilson Professor of Business Administration at Harvard Business School, et al., AYESHA KHAN, AND TARUN KHANNA, 9-08, [“Where Oil-Rich Nations Are Placing Their Bets,” Harvard Business Review, hbr.org/2008/09/where-oil-rich-nations-are-placing-their-bets/ar/1] E. Liu Perhaps the most fundamental transformations are happening in the GCC countries themselves. Amid the colossal buildup of wealth over just the past few years, you might expect that oil-producing states would be lulled into complacency, tempted to live exclusively – and quite comfortably, in fact – off their abundant surpluses. You would be wrong. The Gulf region is intent on creating a name for itself as a center for innovation. Markets for goods and services coming into and being sold out of GCC countries are booming. A healthy rivalry has emerged among GCC states to be recognized as the destination for world-class logistics, real estate, tourism, health care, alternative energy, and so on. This has led to some aggressive efforts within GCC states to improve their fi nancial institutions and to develop leading-edge sustainable infrastructures. Developing a world-class industrial and service economy. Consider what Abu Dhabi’s Mubadala Development Company has achieved in just six years. A March 2007 Fortune article labeled the capital of the United Arab Emirates the “richest city in the world.” Rich? Absolutely. Modern? To be sure, as Abu Dhabi has fi lled itself with the trappings of early twenty-fi rst century capitalism. But Abu Dhabi is not yet a “developed” economy; it has lagged in development of infrastructure, education, health care, and innovation, and it doesn’t have an indigenous institutional infrastructure to support local economic activity in these...
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This note was uploaded on 01/30/2013 for the course ECON 101 taught by Professor Burke during the Spring '13 term at Southern Arkansas University.

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