The Gulf economies of the Middle East are forming partnerships with other emerging markets, redefining the ancient trade routes that once linked East and West. (An excerpt from an article by Joe Saddi, Karim Sabbagh, and Richard Shediac).
The rise of emerging markets in the global economy has sparked a great deal of discussion, particularly in the wake of the worldwide financial crisis. The implications are often framed in terms of the potential impact on the economies of the U.S. and Europe
But a closer look reveals a separate trend that could shift the economic focus away from the West. Emerging markets are building deep, well-traveled networks among themselves in a way that harks back to the original “silk road,” the network of trade routes between East Asia, the Middle East, and southern Europe, some dating to prehistoric times and others to the reign of Alexander the Great. Most of these routes were central to world commerce until about 1400 AD, when European ships began to dominate international trade.
Today’s new web of world trade is broader and more diverse than the old silk road. It is a network among emerging markets all over the world, including China, theMiddle East, Latin America, and Africa. It is a path not just for expanded trade in goods, but for short-term and long-term investment and the transfer of technological and managerial innovation in all directions.
An Important Stop on the Road
The countries of the Gulf Cooperation Council (GCC) — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE — represent one regional powerhouse whose relationships with emerging peers can offer valuable insights into the way such alliances are forming. In the last five years, ties between the GCC and the BRIC countries (Brazil, Russia, India, and China) as well as the “Next 11” countries (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey, and Vietnam) have expanded strongly. The speed with which the new Silk Road is being constructed between the GCC and these other rapidly emerging economies is a clear indicator of the GCC’s rising importance. Even the recent unrest in the Middle East, which included a few of the GCC nations, has not impeded the Gulf’s global ambitions.
The GCC is also noteworthy because of its traditionally strong relationships with the U.S. and Europe. The Gulf nations have to maintain their relationships with these large but relatively stable economies while fostering new relationships with the high-growth economies in emerging markets.
1. More than oil. The top item on the strategic agenda for every GCC country is to diversify its economy and thus decrease its dependence on oil. Despite significant efforts, achieving this goal has so far proven challenging. The governments in the region are eager to continue investing their oil revenues in knowledge-intensive industries that will create jobs for local populations, and they will cultivate trade partners that help them.
2. Rich in talent. The most significant aspect of this change is the skill level of many of the people entering the GCC. No longer do executives come from the West and laborers from the East; instead, skilled individuals from emerging markets are deepening their impact in the GCC with influential positions in the region’s financial, energy, transportation, and public sectors.
3. New sources of capital. GCC nations have long been investors in other countries — primarily in the U.S. and Europe, they are slowly losing share to other Middle East countries and Asia. Major emerging economies such as China, Russia, Brazil, and Mexico, and the countries of the GCC, among others, are active proponents of “state capitalism”. These countries approach state capitalism not as a last resort in times of crisis but as a sensible policy for protecting national interests while still encouraging economic growth.
4. Getting connected. As GCC countries seek to branch out and build relationships with other emerging markets, they have found one point of entry in the information and communications technology (ICT) sector. Like many other developing nations, they have recognized the importance of building knowledge economies to accelerate their development, and have made infrastructure investments and policy changes accordingly.
Global Relationships for the 21st Century
The GCC is at a critical juncture as it determines the parameters of its relationships with partners both old and new, Western and Eastern. But there’s no doubt that the new silk road can be a path toward future prosperity for the GCC countries, building trade and creating wealth as powerfully in the 21st century as the old silk road did in ages past.
Full Article @ http://www.strategy-business.com/article/11310
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