The Gulf blog

Relative competitiveness in the GCC 7, November 2009

Here’s a slide taken from a survey of business attitudes in the Middle East. As you can see, it shows what business men and women think about which country in the GCC is leading the way, in their opinion, in terms of 1) making government more business friendly, 2) strides being made in legal reform, and 3) strides being made in educational reform.

In such a poll I would have expected the UAE to be the number one, but not necessarily as far ahead as they are. I would also have expected to have seen Qatar a bit higher up. These results broadly follow what Transparency International with their corruption perception index and Doing Business with their ‘ease of doing business in…’ index conclude.

Things to note about these statistics:

• Qatar is well placed: highest in region for lack of corruption and moderately placed in terms of ease of doing business.
• Saudi Arabia is (astonishingly) well placed, coming 13th in the world for ease of doing business. Surely it can’t possibly go any higher given its atrocious placing on the corruption perception index. How on earth do they overcome this low score, coming 80th? Surely corruption ‘that bad’ will eventually tell its toll…
• I have written about Kuwait before. Long story short, their poor showings in these indexes are indicative of their overall lack of enthusiasm for foreign investment or cooperation.

The historical corruption data:

(Apologies it’s so small: save it as a picture file to zoom in on it. Qatar-bright red. KSA-Reddy-brown (at the top). Bahrain-green. UAE-light blue. Kuwait-puprle ascending line. Oman-the variable yellowy-orange line.)

A few more things to note:

• The higher on the graph, the worse the corruption.
• Saudi Arabia is getting more corrupt and endemic corruption is notoriously hard a trend to reverse.
• Qatar have, since 2004 (the oldest data I have to hand) been on a consistently ‘less corrupt’ trajectory.
• The Emirates’ boom years from 2004-2008 have also seen corruption rise a not insignificant 6 places from 29th to 35th.
• Bahrain are yo-yoing around (though not as bad as Oman). They will have to get a hold of these trends and keep them under control and on a downward spiral now that their oil deposits are severely depleted. Saudi and Kuwait can afford high corruption scores: Bahrain cannot.
• Kuwait – disparaging of their need for foreign investment as they are – must address their upward spiral (44th-65th in four years) joining the likes of Cuba and El Salvador (and heading towards Columbia) on the index. Yes, technically, they may not need foreign investment now, but by the time they realise that they are beginning to need it, their corruption and economy more generally may be in no fit state to receive it.