Bahrain and the UAE’s investments in trade and technology have helped the nations score the highest among GCC countries in the 2024 Global Economic Diversification Index (EDI), released by the Mohammed Bin Rashid School of Government (MBRSG).
The index ranks countries’ diversification plans. Over the past two decades, the top spots in the ranking have been occupied by three developed nations (the United States, China and Germany), a trend that remains unchanged in the latest report. However, in 2024, the gap between the US and China narrowed from a 20.9-point difference in 2019 to a 6-point difference in 2022.
The MENA region, in contrast, showed a significant improvement in its diversification efforts, as GCC countries increasingly implemented strategies to boost various sectors of their economies and diversify from oil.
The latest EDI highlighted the efforts made by UAE and Bahrain to diversify their economies post-pandemic, including trade liberalisation, investments in technology and regulatory improvements.
The UAE achieved the highest EDI scores of the GCC, obtaining a 95.7 in 2022, compared to 90.9 in 2020. Bahrain followed, scoring 93.7 in 2022, compared to 92.7 in 2020.
Saudi Arabia and Oman have achieved the fastest pace of acceleration, indicating the acceleration of their diversification strategies. In 2022, Saudi Arabia’s EDI score jumped to 90.5, compared to 82.8 two years prior, while Oman showed the second-highest jump in the region, from 80.9 in 2020 to 87.7 in 2022.
Qatar scored 88.7 in 2022, while Kuwait came in at 86.2.
Overall, Western European nations accounted for almost two-thirds of the top 20 highest-ranked nations. The Middle East and North Africa showed signs of slower diversification efforts, although the region managed to reduce its representation among the bottom 20 ranks, decreasing to 10% in 2022 from 25% in 2000.
“Plans to broaden tax bases, trade liberalisation through trade agreements and facilitating rights of establishment and labour mobility are key indicators of how the GCC has been improving its EDI scores in recent years,” said Fadi Saleh, Director of Policy Research at MBRSG.
The MENA region’s EDI score jumped to 98.4 in 2022, from 93.1 in early 2000.