Posted on February 18, 2014

As Gulf economies step up efforts to diversify beyond oil, success depends on participation and buy-in from the “mega community” of stakeholders to achieve the essential task of shifting capital and workers from government jobs into growing industries, says Booz Allen Hamilton (NYSE:BAH).

After a half-century of growth and modernization, the Gulf Cooperation Council (GCC) countries have many positive economic elements already in place – including infrastructure, political stability, and continued oil revenue – but future prosperity requires new alignment between government, business, and education. In a report released today, the global management and technology consulting firm examines how these stakeholders can work together to rein in government deficits, accelerate private sector employment, and create a national workforce suited for success in the global economy.

Booz Allen worked with the Economist Intelligence Unit (EIU) to identify and analyze roadblocks and opportunities for diversified economic growth in four of the six GCC nations: Oman, Qatar, Saudi Arabia and the United Arab Emirates. Among the key findings: in all four countries, investments in information technology and cyber security are accelerating growth in the communications sector. Other high-potential sectors include financial services, healthcare, and tourism. However jump-starting these industries requires that capital and workers be shifted from government jobs – an enduring challenge for leaders across the GCC.  

“The transition from an oil-centric economy to a diversified one is complex but achievable,” says Mahir Nayfeh, Vice President, Booz Allen Hamilton MENA. “The GCC nations have what is perhaps the greatest untapped natural resource: citizens who want their nations to succeed. Booz Allen is uniquely experienced in harnessing this common interest across government, business, education, and civil society to help our clients implement solutions for long-term prosperity.”

In the report, Booz Allen recommends five major actions that leaders can take to build thriving, diversified and more competitive economies:

1.Initiate public-private partnerships

Applying the concept of “mega communities” to this complex problem recognizes that no single organization has all the resources or authority to solve a problem by itself. Success lies in the ability to create public-private partnerships that transcend individual missions in favor of shared interests – and responsibilities – in reaching the Gulf nation’s economic goals.

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2.Launch incentives and reforms to boost private sector growth

“Make-order” jobs for nationals may provide short term results and the appearance of economic progress but they cannot be sustained without government subsidies. Instead, governments should foster private sector growth that generates income from a variety of thriving, diverse industries. Starting with high-potential sectors like communications and healthcare, efforts can include providing seed capital for entrepreneurs, building innovation hubs, and nurturing national champion companies to compete regionally and nationally.

3.Refocus subsidies to build a competitive workforce  

By a wide margin, GCC nationals prefer working for the government over private business. In fact, in three of the four countries surveyed, more than half of employed nationals are employed in the public sector, compared to 20 percent in the UK. Wage subsidies and mandated employment may provide a short-term fix, but they ultimately stifle innovation, pride, and motivation. Long-term success depends on the ability to offer competitive pay, an attractive work environment, and workers with the skills to compete in the global marketplace. One way to address these issues is to provide businesses with short-term subsidies to hire and train nationals.

4.Test, measure, and evaluate the impact of policy initiatives before and during implementation

Before any new initiatives are implemented, governments can assess the potential impact with metrics, simulations, and pilot programs.  Effective measurement, however, requires stakeholders to put in place information systems and processes for collecting, sharing, and analyzing data. Decision-support systems can also help get programs on the right footing. Such efforts will provide government and business leaders the information they need to make fact-based decisions when designing and implementing national economic strategies. Metrics add measures of accountability, and they help monitor and recognize achievement as programs progress.

5.Mount a national communications campaign to drive support and participation

The success of economic restructuring hinges on citizens’ embrace of national economic and development programs. A persuasive communications campaign can show the link between long-term economic success of the GCC nations to healthy private-sector economies. Additionally, the focus on wages and hours should shift to the value of training and the quality of one’s skills. Ultimately, merit-based work cultivates personal responsibility, accountability and motivation -  values that are as crucial to the individual as they are to the nation’s shared success.

To view the full report, please visit