Entrepreneurship in a Transformative and Resource-Rich State: The Case of Qatar

Abstract

Countries blessed with natural resources have generally struggled to achieve sustainable economic development and prosperity. Population growth, the depletion of natural resources coupled with mismanagement, and sharp fluctuations in prices of those resources are among the main reasons for sub-optimal economic performance. Some resource-rich countries have been expending effort and money in an attempt to change this inverse relationship (a.k.a. "the resource curse") by designing policies to diversify their economies with high value-added industries and sectors. Qatar is a such country and point of the interest in this article. Qatar's political and economic structure, its efforts to diversify its economy, and the potential for improved entrepreneurial outcomes with high value-added products, services, businesses, and industries are analyzed. The country has been very effective in maximizing the benefits of its oil resources and especially its large natural gas reserves, becoming the largest exporter of liquefied natural gas (LNG) in the world. Revenues from oil and gas sales have been invested in the domestic economy and global assets. Thus far, however, it has not shown the in-house capacity for innovation and entrepreneurship critical for sustainable economic diversification going forward. This publication was made possible in part by NPRP grant #10-1203-160007 from the Qatar National Research Fund (a member of the Qatar Foundation).

Fig. 1

“The Ruling Agreement” in Qatar (Kaya and Tsai, 2016).

Fig. 2

Discovery and Development of the North Field in Qatar (Ibrahim and Harrigan, 2012).

Fig. 3

Qatar Export Revenues from Oil and Gas Products (Tsafos, 2018).

Fig. 4

Qatar's GDP Sectoral Decomposition (IMF, 2018).

Fig. 5

Average Cost of Producing a Barrel of Oil by Country (in USD) (Argaam, 2016).

Fig. 6

Biggest Banks in Qatar and their Ownership and Board Structure (Hanieh, 2016).

Fig. 7

Value of Family Holdings in Qatari Stock Exchange by the end of 2017 (Snoj, 2017).

Fig. 8

Economic Growth of Qatar vs. Selected Countries and Regions (Ibrahim and Harrigan, 2012).

Fig. 9

Oil and Gas Revenues Share in Qatari Economy (Authors’ estimate based on IMF, 2017).

Fig. 10

International Oil Prices (https://blogs.wsj.com/moneybeat/2014/11/28/oil-prices-the-good-the-better-the-ugly/).

Fig. 11

Production Cost of Shale Oil Production in USD per Barrel across the US Regions (Mlada, 2017).

Fig. 12

Average US Domestic Oil Production in Millions of Barrels per Day (Pioneer, 2017).

Fig. 13

Expected Global Price of Oil in the 2030s after EVs Replace ICE Cars (Arbib and Seba, 2017).

Fig. 14

Fiscal Breakeven Oil Prices for the GCC States for 2015–2018 (IMF, 2018).

Fig. 15

Qatar's Ranking in “Ease of Doing Business” out of 190 countries (The World Bank: https://www.doingbusiness.org/en/rankings).

Fig. 16

Daily Combined Oil and Gas Production per Citizen (Authors’ calculation based on BP, 2018; Hvidt, 2018; Malik and Nagesh, 2019; Mathew, 2019; CIA World Factbook).