Policy Research Reports
Accelerating the Economic Transition of Qatar
No.
PRR 57
Publisher
ERF
Date
February, 2025
Summary
Qatar is a country in transition. Once it began exporting liquefied natural gas (LNG) in the mid-1990s, Qatar entered a period of rapid economic growth and development. GDP increased from under 20 billion USD in 1995 to over 160 billion USD in 2015 (in constant terms), before settling around this level. Qatar channeled this revenue into modernizing the country. It expanded public services, executed large infrastructure projects, and engaged in new construction to accommodate a five-fold increase in its population driven by the arrival of migrant workers. The sense of urgency was maintained by Qatar’s successful bid to host the 2022 FIFA World Cup. The post-World Cup period represents a new chapter for Qatar. As it works to complete infrastructure projects, it must also pivot from building to effectively utilizing what is has built.
This report provides a review of Qatar’s economic situation and an analysis of its economic development outcomes focusing on the challenges and bottlenecks it faces as it transitions from a hydrocarbon-based to a knowledge-based economy. It diagnoses the key drivers of the country’s economic development, including education, health, the labor force, institutions, the financial sector, energy, infrastructure, and the environment. The report examines these issues through the lens of Qatar’s performance on its Sustainable Development Goal (SGD) targets as well as Qatar’s own development priorities as articulated in Qatar National Vision 2030 and its Third National Development Strategy (NSS3), which focus on economic diversification and financial sustainability as the main economic priorities for the country.
In terms the SGDs, Qatar has made substantial progress on public service delivery and infrastructure development, including Good Health and Well-Being (SDG3), Quality Education (SDG 4), and Industry, Innovation, and Infrastructure (SDG9). This aligns with the priorities that Qatar set as it began its rapid economic growth. The SDGs that Qatar is furthest away from achieving and where progress has stalled are Clean Water and Sanitation (SDG6), Responsible Consumption and Production (SDG12), Climate Action (SDG13), and Life on Land (SDG15). These are mostly environmental goals that deteriorated during Qatar’s rapid economic growth and where Qatar is currently focusing its policy efforts. Indeed, NDS3 gives significant attention to environmental stability, social concerns, and improved governance.
In terms of progress on its own development priorities, the report finds that despite some indications that progress toward economic diversification has been made, there are other indications that Qatar’s economy remains highly dependent on hydrocarbon revenues. Much economic activity remains indirectly connected to income from oil and natural gas and few globally competitive industries have emerged that could be sustained without this underlying revenue base, including sectors where Qatar is a reginal leader such as education and health. Furthermore, while Qatar has a clear vision and strategy for transforming its economy, its main challenge will be in implementing its strategy and overcoming institutional inertia.
The findings suggest that Qatar must accelerate its economic transition to a diversified, knowledge-based, non-hydrocarbon economy driven by innovation and supported by a diversified revenue base. As part of its transition, Qatar must identify and leverage areas of comparative advantage and improve its business and investment climates to allow competitive sectors and industries to develop and emerge. With its relatively small national population, Qatar must also make the country a destination of choice for skilled foreign workers who can help it to build and maintain these competitive industries. During this transition, Qatar must pay special attention to improving its environmental stewardship, including reducing its greenhouse gas emissions and protecting its scarce freshwater resources.
Research Fellows
Nader Kabbani
Senior Fellow and Director of Research, Middle...