GCC Countries as "Rentier States" Revisited

Giacomo Luciani, the senior editor of this four volume set, along with Hazem Beblawi laid the conceptual foundations for Arab rentier states a quarter of a century ago.¹ He and his team of some 40 researchers have now revisited this concept as part of a broader effort to describe and analyze the political economies of the Gulf Cooperation Council (GCC) states. The very title of the flagship volume edited by Luciani, Resources Blessed: Diversification and the Gulf Development Model, suggests revision to the prevailing, Luciani-influenced orthodoxy that the resource curse and its attendant rentierism are inherently inconsistent with economic diversification and development. Revisionism implied by the title is indeed borne out as the editor and authors present a largely positive account of the economic accomplishments and future of the GCC states, distancing themselves, sometimes explicitly, not only from negative prognostications for rentier states, but even from the present applicability of the concept itself to the "mothers" of all rentier states, those that comprise the GCC.

Such a corrective effort is long overdue, if only because the inevitable stretching of what was originally a useful concept may have rendered it too general and amorphous to provide useful analytical insight and unambiguous causal explanations. Moreover, a literature of corrections and qualifications to the concept has gradually emerged over the past decade or so, suggesting the need and timeliness of returning to the original empirical base for its formulation. If its applicability even in the Gulf is now in doubt, it is clearly time for rentierism to be reconsidered, revised, or possibly even rejected as a useful notion.

The original argument rested on the proposition that abundant hydrocarbon rents accruing to governments would inevitably lead to authoritarian states focused on allocation rather than extraction and production. Having no need for taxation they would not be compelled to grant representation. Having little need for revenue from non-hydrocarbon based direct and indirect taxes, they would neglect development of a productive economy that could generate taxable earnings. States organized around allocation would not have reason to create market incentives for development. They would also structure relationships with society vertically through chains of patronage dependence. Societies and labor forces would in turn be segmented, unable to form horizontal linkages, such as those reflected in working and middle classes, labor unions and political parties, necessary for both political and economic development. State domination of the economy, as reflected in monopolies granted to state-owned enterprises (SOEs) in the most profitable sectors, key of which is that of hydrocarbon extraction, processing, and export, would impede both private development and improved performance of the SOEs themselves. The portrait painted of the rentier political economy was, at least in the concept's early years, one of stagnating stability based on a social contract, the mutual obligations of which would perpetuate the separation of state and society and render democratization unlikely, even irrelevant.

Initial disaffection with the concept resulted from observation of the uneven impact of the alleged resource curse.² Indeed, in some settings, with Norway being that most frequently cited, oil seemed more blessing than curse.³ Democracy remained intact in those countries where it had previously been established. While some evidence of Dutch disease did seem ubiquitous in "oil curse" economies, many countries were able if not to completely contain it, at least to develop other sectors of their economies.⁴ In the meantime, large-scale quantitative comparative studies began to suggest qualifications to the basic correlation between oil rents and authoritarianism and to cast doubt on alleged relationships with other hypothesized dependent variables as well.⁵

The so-called "new institutionalists" also joined the...