When Can Oil Economies Be Deemed Sustainable?

Acknowledgements
Contents
Notes on Contributors
List of Figures
List of Tables
List of Boxes
Chapter 1: Introduction: Economic Sustainability of Oil Economies
1 What Is Sustainable?
2 What Is Unsustainable?
3 This Book
4 A Holistic, and Realistic, Picture
5 Fiscal Sustainability
6 Labor Market Reform
7 Environmental Sustainability
8 Sustainability of GCC development
Chapter 2: Framing the Economic Sustainability of Oil Economies
1 Introduction: My First Visit to Abu Dhabi
2 No Economy Is Sustainable Without Change
3 Identifying Needed Change
4 Diversification Has Taken Place
5 Dutch Disease and Expatriate Labor
6 The Productivity Issue
7 Potential for Further Diversification and Defense of Hydrocarbons’ Value
7.1 Decarbonize the Production of Oil and Gas
7.2 Carbon Capture and Sequestration
7.3 Further Integrate Downstream Toward Non-fuel Uses
7.4 The Hydrogen Economy
8 Need for Developing Taxation
9 Genuine Reliance on Private Sector
10 Tackle Inequality
References
Chapter 3: Fiscal Sustainability, the Labor Market, and Growth in Saudi Arabia
1 Introduction
2 Sizing-Up the Macro Shock
3 The Stabilization Challenge
4 What Growth Strategy?
5 The Central Challenge: Saudis Employability
6 The Policy Agenda Ahead
7 The Political Economy Challenge
References
Chapter 4: Outlook for Producer Economies
1 Introduction: Risks to Producer Economies—Current Problems and Emerging Pressures
2 How Do the Economic Pressures in Producer Economies Evolve Going Forward?
3 The Macro-Economic Impact of the Two Scenarios
4 The Future Role of a Competitive Energy Sector
4.1 Capturing More Value from Hydrocarbons
4.2 Using Natural Gas Strategically in Support of Diversification Goals
4.3 Tapping the Large, Underutilised Potential of Renewables
4.4 Phasing Out Subsidised Use of Energy to Improve Its Efficiency
4.5 Ensuring Adequate Investment for a Dynamic Upstream
4.6 Supporting the Development of Cleaner and More Efficient Energy Technologies
5 Implications and Conclusions
References
Chapter 5: Economic Diversification in Arab Oil-Exporting Countries in the Context of Peak Oil and the Energy Transition
1 Introduction
2 The Energy Transition and Perceptions of Peak Oil Demand
3 The Implications for Arab Oil-Exporting Countries
3.1 Oil Demand Is Unlikely to Increase Strongly Over the Next Two Decades
3.2 Large Investments Will Still Be Needed in the Oil Sector to Fill the Gap in Supply
3.3 Renewables Are at an Inflection Point
4 The Strategic Role of the Oil Sector in the Energy Transition
4.1 The Oil Sector Will Continue to Dominate the Economy, But it Needs to Play a More Active Role in the Diversification Process
4.2 The Use of Demand-Side Measures to Optimise the Resource Base
4.3 Renewables as a Complement to Economic Diversification Strategies
5 The Role of Oil Policy and Producer Cooperation
6 Conclusions
References
Chapter 6: Economic Diversification and Sustainable Development of GCC Countries
1 Introduction
2 Trends in Production and Foreign Trade
2.1 Exports and Imports
2.2 Intermediate Consumption, Value Added and Output
3 Economic Diversification of the GCC Countries in International Comparison
3.1 Product Concentration and Product Diversification
3.2 Economic Diversification of the Industrial Sector
4 New Assessment for GCC Countries with Input-Output Data
4.1 Traditional Input-Output Indicators for GCC Countries
4.2 Primary Diversity Measure
5 Sustainable Development of Nations: Adjusted Net National Income and Savings
5.1 Adjusted Net National Income
5.2 Adjusted Net Saving
5.3 Test for Sustainable Development
6 Conclusion
References
Chapter 7: Redefining Economic Sustainability in Resource-rich States: Comparative Lessons
1 Introduction
2 The Changing Understanding of Economic Sustainability in Resource States
3 Redefining Economic Sustainability
3.1 Why a Redefinition Is Required
3.2 A Redefinition: Back to Basics
3.2.1 Growth in Theory
3.2.2 An Elementary Numerical Simulation
3.2.3 Natural Resources and Technology
3.3 The Takeaway
4 Lessons and Comparative Assessments
4.1 Fiscal Rigor and Savings for Capital Accumulation
4.2 Human Capital
4.3 Technology, Institutions, and Taxes
4.4 Industrial Reform and Regulation of Oligopolies
5 Key Messages
Appendix 1: Classical Growth Model
Natural Resources and Technology
References
Chapter 8: Fuel and Electricity Reform for Economic Sustainability in the Gulf
1 Introduction
2 The Triple Rationale of Low Energy Prices
3 The Sustainability Rationale for Energy Pricing Reform, and Results in the GCC
4 Fuel Pricing Reform in the GCC
4.1 The ‘Gradual’ Fuel Price Reformers
4.2 The ‘Ad hoc’ Fuel Price Reformers
4.3 GCC Fuel Prices in Comparison
5 GCC Electricity Pricing Reforms and Tariffs
5.1 Cross-Subsidies Between Consumer Groups
5.2 Blocked Tariff Designs
5.3 Electricity Pricing Reforms and Tariffs in Comparison
6 Commerce, Industry and Energy Pricing Reforms
7 Conclusion
References
Chapter 9: Fiscal Sustainability and Hydrocarbon Endowment Per Capita in the GCC
1 Introduction
2 Variations in GCC Hydrocarbon Endowments and Economic Sustainability
3 Hydrocarbon Endowment Seen in Various Fiscal and Economic Indicators
4 Fiscal Reform Momentum
5 Phases in GCC Fiscal Reform
5.1 Phase 1: Expenditure Cutbacks and Subsidy Reforms in 2015 and 2016
5.2 Phase 2: Reduction in Pace of Reform in 2017; Stabilization in Spending
5.3 Phase 3: Shift to Expansionary Fiscal Stance from 2018; Introduction of VAT
5.4 VAT Introduction, the Main Reform in Phase 3
5.5 Measures to Support Growth
6 Greatest Adjustment by Country
7 Conclusion
Appendix A: Key Fiscal Reforms by GCC Countries
Appendix B: UAE Key Policies Announced to Support Economic Activity
References
Chapter 10: GCC Fiscal Reforms and Labor Market Policies
1 Introduction
2 National Population Impacted by Reforms; Greatest Burden on Expatriates
3 Hydrocarbon Endowment Per Capita and the Labor Market
4 Labor Market Reforms and Policies to Reduce Foreign Labor
5 Pressure on Expatriate Population and Economic Impact
6 Conclusion
References
Chapter 11: Economic Diversification and Job Creation in the Arab Gulf Countries: Applying a Value Chain Perspective
1 Introduction
2 Diversification in the Gulf Countries
3 Value Chains
4 The Challenge of Job Creation in the Gulf
4.1 Diversification Within the Oil and Gas Sector
4.2 Moving Downstream Via Technological ‘Upskilling’ in the Gulf Countries
4.3 Upskilling of the National Labor Force
5 Conclusion
References
Chapter 12: Climate Strategy for Producer Countries: The Case of Saudi Arabia
1 Introduction
2 Contrasting Strategies
3 Saudi Arabia’s Climate Profile
4 The Importance of Oil in Saudi Political Economy
5 Strategy No. 1 “Dig In”: Reduce Vulnerability of Oil Sector to Climate Action
5.1 Climate Obstructionism
5.2 Petrochemicals and Non-Combustion Uses for Crudes
5.3 Differentiating Among Crude Oil Grades by Carbon Intensity
5.4 Backing Internal Combustion Engines over EVs
5.5 The ‘Lock In’ Strategy
6 Strategy No. 2 “Join In” Climate Action
6.1 Renewables and Nuclear Power
6.2 Social License to Operate
7 Strategy No. 3 “Throw In” and Accept Climate Damage
8 Conclusion: A Fourth Strategy
References
Chapter 13: The Sustainability of GCC Development Under the New Global Oil Order
1 Introduction
2 Growth and Institutions in the GCC: Resource Rents Threshold Matters
3 Maintaining Civil Peace and Political Stability: Resource Rents Threshold also Matters
3.1 Resource Rents, Threshold Effects and Civil Wars
3.2 Resource Abundance, Threshold Effects and Democratic Transitions
4 GCC Development Sustainability: Some Challenges Ahead
5 Concluding Remarks
References
Chapter 14: When Can Oil Economies be Deemed Sustainable?
1 The End of Oil
2 Need for Diversification?
3 Fiscal Sustainability
3.1 The Difference between Rentiers and Super Rentiers
3.2 Fiscal Adjustment
3.3 Developing a Domestic Taxation Base
4 Sustainability and the Labor Market
5 Political Sustainability
6 Can the GCC Economies Be Sustainable?