The GCC countries could accelerate the region’s economic growth by adding more than $2.5 trillion to GDP over the next decade through productivity performance enhancement, a new study has revealed.
From the current 3.8 per cent growth to 5.4 per cent in 10 years, this upside of economic growth and prosperity prospects can be unlocked if GCC countries can “strategically improve their productivity performance by leveraging the Productivity Potential Index (PPI) to identify the weakest determinant of productivity and then lifting that to the level of the best-in-class countries,” the study pointed out.
The study, titled ‘In search of productivity: The next $50 trillion global economy’ by World Governments Summit in collaboration with Strategy& Middle East emphasises the importance of improvements in productivity performance, imposing the newly introduced PPI to identify and address the weakest determinant of productivity.
“The potential boost to GCC economic growth from a better understanding of the determinants of productivity is impressive and if its findings are acted upon, this could substantially improve the lives of people in the region over the next decade,” said Chadi Moujaes, partner with Strategy&, part of the PwC network. “We hope our research will help governments everywhere identify more accurately where they can make a significant difference to their productivity and economic growth performance.”
“At a time when the world is looking to become more sustainable, it is essential to have appropriate tools for measuring economic progress that take into account criteria such as the environment and biodiversity, along with a range of social capital measurements,” said Dima Sayess, partner and Ideation Center lead at Strategy&. “This new index fills an important gap.”
According to Gulf Investment Report 2023, published by Century International Holdings, the GCC can emerge as a global economic powerhouse with the combined GDP of its six countries doubling to $13 trillion, up from a projected $6 trillion by 2050, if the region embraces a green growth strategy, according to a research report.
The combined GDP of the GCC countries has already touched the $2 trillion mark and investment in green and sustainable projects could transform the region into a global powerhouse, according to the Gulf Investment Report.
Strategy& report’s key findings reveal that productivity, a fundamental measure of economic performance, has traditionally focused on goods and services production compared to input requirements. However, the conventional measures have often overlooked critical aspects of the modern era, such as climate change, biodiversity loss, and social changes. The report introduces a forward-looking methodology that incorporates social capital, natural capital and institutional quality, alongside traditional measures like labour and human capital, physical capital, innovation and intangible capital.
The Productivity Potential Index is a framework presented in the report, complemented by an online policy simulator. This tool allows users to assess how 25 countries compare across 19 criteria grouped into six categories. The index’s estimated potential productivity answers the question of what a country’s productivity could be, given its endowments, if utilised as effectively as the average country in the sample.