All of the Arabian Gulf's economic visions emphasise opening up the economy to foreign direct investment as a way of improving performance. Usually, policymakers focus on the jobs directly created by the investment and the resulting knowledge transfer as the main benefits to the domestic economy.
Economists typically criticise import tariffs, because they result in higher prices for consumers. The Arabian Gulf countries have generally subscribed to this view. However, as the Gulf countries look to diversify their economies, is it time to consider imposing temporary tariffs to develop their own domestic industries? A new paper by Reka Juhasz (Columbia University, US) suggests that this may be the case.
In order to boost entrepreneurship, Saudi Arabia should consider following a 1950s plan used to improve the Italian economy, which was done in partnership with the US, a recent paper by Michela Giorcelli of the University of California suggested.
For many things we buy, our consumption decisions partially reflect our efforts to convey a certain social status to others. Luxury cars, exotic brands of water and designer perfumes give us much more than the direct enjoyment of consumption; they send a signal to our peers that we are wealthy and powerful, and that we have good taste.
As the political crisis unfolding in Venezuela seizes the headlines, analysts frequently draw attention to the fact that the South American country has the largest oil reserves in the world. The example of Venezuela, as well as several other African and Middle Eastern states, confirms that natural resource wealth is no guarantee of high living standards. In fact, in many cases, it seems as though an abundance of oil and diamonds may have been a leading cause of poverty and instability, rather than a source of prosperity.