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Resource curse; the paradox of plenty; Dutch Disease. Economists have no shortage of names to describe the enigma, whereby countries swimming in oil have rubbish economies and poor citizens. They have fewer solutions.
The latest contribution is the 2009 Arab Human Development Report, published this week by the United Nations. The authors agree that oil has done much harm and only limited good for people in the region.
“The fabled oil wealth of the Arab countries presents a misleading picture of their economic situation,” says Walid Khadduri, one of the authors. Oil, he says, “masks the structural weaknesses of many Arab economies”.
Some numbers: Arab unemployment is the highest in the world at 14%. Arab countries were less industrialised in 2007 than in 1970. Some 12% of babies in the Arab world are born underweight, double the figure for East Asia.
The report urges economic reform: cutting back state handouts and replacing them with education and investment programmes to build long-term prosperity.
Bizarrely, Dubai may serve as a template. The city's economic model has come in for widespread criticism of late, much of it deserved, after government property developers overstretched themselves, leading to job losses, unpaid bills and a $10 billion federal bailout.
Strip out this blip, and the picture is rosier. From a fishing village 40 years ago, Dubai has nicely diversified including heavy industry (Dubai Aluminium), travel and tourism (Emirates Airline) and services (banking, media etc). It's the regional hub of choice for multinationals such as HSBC, Microsoft and Sony.
The secret of its relative success? A lack of oil. In the 1960s and '70s, the sheikhs pumped what hydrocarbon revenue they had into building top-notch ports, airports, roads, power plants and hotels. Oil is only a curse if you don't know what to do with it.
* Dubai is taking further steps to diversify its export base with camel milk chocolates. Al Nassma is a state-owned chocolate maker that launched in October last year, selling the sweets to the domestic market. Now it's in talks with international distributors, including Harrods.
* Traffic through Dubai's international airport bucked the global downturn, climbing 10% in June from a year earlier. Some 3.4 million passengers used the airport last month. That's good news for the airport operator, though not necessarily the airlines. Carriers including Emirates admit they're filling planes with cheaper tickets, and fewer customers in the lucrative business and first-class cabins.
