Transnational Research Associates

Qatari Industrial Policy and Dynamic Comparative Advantage

Art Madsen, M.Ed.

The nation of Qatar, under the leadership of Sheik Hamad Al-Thani, has made great strides in recent years. Its industrial policy has been increasingly diversified, although petroleum exports continue to serve as the nation’s greatest source of wealth. The strategic decisions that have been made in Qatar to maintain equilibrium are widely considered to have been economically wise.

By combining (1) a skilled foreign and domestic labor force with (2) the latest technological developments and (3) available capital, the Qatari Planning Ministry has managed to increase real GDP growth by a factor of from 2.2% in 1999 to a projected 6.6% in 2001 (Figure I). Balancing of these three indispensable forces constituting the components of dynamic comparative advantage (DCA), as described by Carbaugh (2000, 96), has made this not only a possibility, but a reality. The same strategies have been used in subsidiary industries such as Qatar’s steel and polyethylene processing facilities, as well as in the nation’s sand treatment plants and paper industry (QIMCO, 2001).

Capitalization of Qatari industries required an increase of external indebtedness by a factor of US$2.1 billion over one and half years, bringing the foreign debt of Qatar to a projected US$13.1 billion through the end of the current year (Figure I). This debt level seems to have stabilized, however, and is underpinned by the constant flow of oil revenue. Technological advances, made available by Western Nations, have added the second component of dynamic comparative advantage, and, lastly, many efficiency-enhancing measures, such as TQM and post-Ricardian models, have been implemented within Qatari industries across-the-board.

The extent of government involvement in the effort to positively position Qatar in relation to competitor nations, has been considerable. Unlike many Western democracies that require laborious democratic negotiations, Qatar’s governmental decision-making apparatus is far more centralized. Although committees, known as "shuras", advise the Finance and Planning Ministries on the formulation of industrial policy, the inner Ministerial core of officials actually decides on measures to be implemented.





Real GDP Growth





Oil Production (b/d)





Oil Exports (US$ bn)





Consumer Price Inflation (year





Export of Goods (fob) (US$ bn)





Import of Goods (fob) (US$ bn)





External Debt (year-end; US$ bn)





Source: "Qatar’s Economic Forecast", US-Qatar Business Journal,

U.S.-Qatar Business Council, December 14, 2000


Qatar, as a result of proper internal planning, enjoys a dynamic comparative advantage, therefore, over less well-organized nations such as Bahrain or Yemen, even when this evaluation is adjusted for available resources and national wealth. The notion of DCA incorporates the need to achieve this favorable status in relation to competing countries, but not at the expense of causing internal dis-equilibrium, as indicated by inflation or trade deficits. Qatar has been fortunate on both counts: consumer price inflation has increased only slightly from 2.2% to a projected 4% over 18 to 24 months, but may soon subside (Figure I). Exports have been roughly double the level of imports, creating an ideal internal economic climate. Surplus capital, generated through trade, is recycled in an economically efficient manner, into debt service, industrial growth and social programs.

By creating ideal conditions for (1) the creation of capital, (2) the social and educational improvement of the workforce, and (3) the importation of technological expertise, the State of Qatar has successfully achieved an enviable position in relation to its neighbors and international competitors.

As can be readily seen, both DCA and a governmentally enlightened industrial policy are essential features in ensuring the continued success of Qatar’s petro-chemical, steel, polyethylene and sand treatment industries.


Carbaugh, R.J. International Economics, South-Western College Publishing, Cincinnati, Ohio, 2000.

……………. "Qatar’s Economic Forecast", US-Qatar Business Journal, U.S.-Qatar Business Council, December 14, 2000.

……………"Qatar Sand Treatment Plant", Qatar Industrial Manufacturing Company, Doha, Qatar, 2001