17/01/2010

As the emirate looks to transform from a planned economy to one driven by the private sector, it has drafted in a legion of experts to advise it on the process. Tom Gara reports

Government-led capitalism is an economic model that may not be unique to the Gulf, but it is in the GCC where it has reached its most user-friendly state.

Planned economies, such as that of the former Soviet Union, often conjure up images of bread queues, ration cards and badly made tractors. As the Soviet Union was collapsing, the system became so unbalanced and shortages so common that people could queue for hours to buy basic consumer products, and manufacturing suffered.

However, the Gulf has demonstrated that a planned economy can also produce great airlines, decent banks and first-rate hotels.

But what history shows, and what regional governments are keenly aware of, is that the decentralisation of an economy is inevitable. The process can be extremely painful, and often ends disastrously.

So in Abu Dhabi, where social and economic transformation is being led almost entirely by the Government and government-linked companies, the move to a decentralised economy is – like almost everything else – being carefully managed by the Government, aided by a legion of international specialists.

One of those helpers is Insead, the French business school that is consistently ranked among the world’s best. Its Abu Dhabi campus has been transferring leadership and management thinking to the Government and its many businesses, working to build the corporate capability of the emirate.

It will not happen overnight. Moving from an economy driven by an extremely wealthy government to one whose momentum comes from its entrepreneurs and private businesses is something that will take time, says Subi Rangan, the professor of strategy and management at Insead.

For more on this:

http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100116/BUSINESS/701169956/1005

Tom Gara - The National