Date: 2025-04-17 Page is: DBtxt003.php txt00025578
MIDDLE EAST
ECONOMICS EXPLAINED
Why The Gulf States Need To Keep Building Big Dumb Mega Projects
ECONOMICS EXPLAINED
Why The Gulf States Need To Keep Building Big Dumb Mega Projects
Original article: https://www.youtube.com/watch?v=pnrAxfzHElo
Peter Burgess COMMENTARY
I have watched this video several times. I had a formal training in economics at Cambridge in the late 1950s and 30 years later in the 1980s did quite a lot of consulting work for the World Bank, UN agencies and others in various parts of the Middle East. This including working with KISR in Kuwait.
My understanding of global economics is that everything changed in 1973 when the OPEC oil cartel was established. While it was to a great extent it was an Arab initiative, it was welecomed by the internationl oil majors who had been struggling for many years with crude oil supply far exceeding demand. A cartel could address this situation in ways that a 'free market' cannot.
Several important countries also enabled OPEC very quietly including the Netherlands and the UK which had invested heavily on 'North Sea Oil' which was going to be unprofitable at the global prices prevailing pre-OPEC.
Lastly, I have concluded that the United States was also an enabler of changes set in motion by the establishment of OPEC not least of which was for international oil contracts to be denominated in US$ ... massively reducing the role of the £ sterling in global commerce.
Over the last fifty years the Middle East has changed dramatically ... and this video talks about some of what is going on now. It is a good video ... but there is a lot more to understand!
Peter Burgess
Economics Explained
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Oct 11, 2022 (Accessed October 2023)
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Saudi Arabia, Qatar, the UAE and other oil rich Middle Eastern states have announced plans to collectively invest trillions of dollars in new megaprojects, the most extreme of which is Saudi Arabia's $1 trillion 170km skyscraper called The Line. Why are these countries spending so much on mega projects and does it make any economic sense?
- 0:00 - 2:33 Intro
- 2:34 - 3:23 Trends
- 3:24 - 6:06 Dutch disease
- 6:07 - 10:25 Rybezynski's theorem
- 10:26 - 11:49 Dependence on oil
- 11:50 - 12:48 Norway example
- 12:49 - 13:50 Sovereign wealth funds
- 13:51 - 16:10 Mega projects
- 16:11 - 17:19 Tourism
- 17:20 Attracting businesses
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