The Monday of December 21 (2015) provided another significant milestone in the ongoing saga of oil price volatility. Brent crude oil prices fell to $36.05 a barrel, the weakest since July 2004, and surpassing even the low of $36.20 on December 24, 2008. The deepening oil price fall is exacerbating concerns over widening fiscal deficits in the GCC. The following table provides a snapshot of the fiscal surplus (or deficit) situation in the GCC, from 2004 through 2016(f).
From the above table, it is evident that only Kuwait and Qatar are estimated to enjoy a surplus in 2015. Plotting the GCC surplus/deficit from 2004 through 2015 against the average dollar price of crude Brent shows the deep correlation.
Thus, diversifying the economy is an imperative for the GCC, on building a competitive knowledge economy and promoting innovation, research, and development (R&D). However, for building a knowledge economy, reliable access to data and information is required, which should be underpinned by robust research or analytics.
The 2014 Marmore research publication, called ‘Research in GCC: The Knowledge Gap’, found that in the GCC, often, inadequate availability of statistics from national authorities, lack of data from industrial associations and limited disclosures by public companies can limit the degree of research and by extension its effectiveness. Moreover, data or information often comes with significant time lags. Knowledge economy experts point out the importance of the triple helix model of innovation, i.e., government-industry-university relationships and synergies, in terms of nurturing sustainable economic development. University research, which is often considered the cradle of innovation, is found lacking in the GCC region as evidenced by the number of scientific papers published in 2014.
In the GCC, R&D spending, largely, has lagged global peers. Technology is increasingly going to be a critical enabler of economic change and competitive advantage. However, in order to understand what a country can do best, R&D spending has to be smart, i.e., it has to be backed up by research that is reliable in identifying suitable industry clusters and innovation ecosystems. Thus, R&D interventions have to be preceded by granular analytics.
In order to accelerate the process of the knowledge economy and innovation growth, the Research in GCC: The Knowledge Gap report suggests that the GCC can take the following measures for improving analytics and research capabilities.
