While the social conflict theory (SCT) suggests that absolute monarchies will not tolerate inclusive economic institutions, the Gulf Cooperation Council (GCC) countries have regularly achieved above global average ratings for property rights protection, entry barriers, disruptive wealth redistribution and corruption. This paper discusses the extent to which GCC states have potential to further improve their institutional quality. We explore whether inclusive economic institutions may emerge in GCC states, such as: (1) regional economic integration and competition which alleviate rulers’ capability to expropriate private property and ease entry barriers to the market, (2) rulers of resource rich economies sustain political power with control of natural resources as opposed to the extraction of private property; and (3) prospect of long-term gain for the ruler incentivizes the adoption of a market-based economy. Strong state involvement in manufacturing and the monopoly of some services, the effect of tribalism in economic affairs and the distribution of resources, as well as a sponsorship system for foreign workers in these states may all impede the development of a truly competitive and free economy.
The Emirate of Abu Dhabi heavily relies on seawater desalination for its freshwater needs due to limited available resources. This trend is expected to increase further because of the growing population and economic activity, the rapid decline in limited freshwater reserves, and the aggravating effects of climate change. Seawater desalination in Abu Dhabi is currently done through thermal desalination technologies, such as multi-stage flash (MSF) and multi-effect distillation (MED), coupled with thermal power plants, which is known as co-generation. These thermal desalination methods are together responsible for more than 90% of the desalination capacity in the Emirate. Our analysis indicates that these thermal desalination methods are inefficient regarding energy consumption and harmful to the environment due to CO2 emissions and other dangerous byproducts. The rapid decline in the cost of solar Photovoltaic (PV) systems for energy production and reverse osmosis (RO) technology for desalination makes a combination of these two an ideal option for a sustainable desalination future in the Emirate of Abu Dhabi. A levelized cost of water (LCW) study of a solar PV + RO system indicates that Abu Dhabi is well-positioned to utilize this technological combination for cheap and clean desalination in the coming years. Countries in the Sunbelt region with a limited freshwater capacity similar to Abu Dhabi may also consider the proposed system in this study for sustainable desalination.
This paper develops a theoretical model to analyze whether a rentier state can diversify its economy away from the rent revenue and hence sustain the economic development and preserve the status-quo. Considering the decarbonization process of the global economy and rapidly fall in economic value of hydrocarbons in the face of the supply glut, rentier states depending on oil and gas revenues urgently need to diversify their economies to avoid social backlash and political upheaval. There are three intertwining factors that determine an effective economic diversification away from the rent revenue: The profitability of non-rentier sectors, the size of the domestic economy to induce a “Big Push” for industrialization to non-rentier sectors, and the level of economic inclusivity. For an optimal level of economic diversification in a rentier state: (1) Non-rentier sectors should be attractive to private agents without the entry barriers; (2) domestic economy should be large enough to induce investment into non-rentier sectors; (3) the ruler(s) should have sufficient tolerance (inclusivity) for private agents investing into non-rentier sectors. Our findings indicate that a rentier state can achieve an optimal level of economic diversification provided that the conditions above are met even without any political change.
Inequality, in any form and dimension, is a major damaging factor for sustainable development. One of the essential drivers of inequality is the over-agglomeration and congestion in a certain region. The reasons for the agglomeration are well documented, such as knowledge-spillovers, access to supply and demand markets, availability of skilled labor, and good infrastructure. However, over-agglomeration in a region, mainly triggered by poor planning and mismanagement of resource allocation, may also become a barrier for sustainable development. The over-agglomeration generally results in undesired negative effects impeding the economic, social, and environmental development any further, even causing irreversible social and environmental issues. Following the big-push model, a theoretical model is proposed to consider the negative effects of increasing rent prices due to over-agglomeration first on the industrial development of a country. This is then followed by a case study of Istanbul as a megacity and its effects on Turkey’s sustainable development through industrial, social, and ecological aspects. Istanbul has been the main industrial and economic center of Turkey as the city further expanded rapidly in the last 50 years in terms of population and urbanization. This over-agglomeration has resulted in very high rent prices in the city compared to the rest of Turkey, which affected the country’s industrialization. The over-agglomeration in Istanbul has also created significant economic imbalances and income-inequalities within the city and across Turkey. The environmental degradation, the loss of forest area, and very high air and noise pollution were other results of the city’s rapid expansion and over-agglomeration. These industrial, social, and environmental dynamics pose serious challenges to Turkey’s sustainable development as long as over-agglomeration in Istanbul persists or even aggravates further.
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