<p>First, combining all GCC countries in one bucket is the wrong approach of thinking about this, as it does not make sense to put Saudi Arabia with a population of 34 million (about 22 million are citizens) in the same group as Bahrain or Kuwait and others where nationals are less than 1 million.</p>
<p>Now to answer your question, the smaller GCC countries (i.e. all but Saudi Arabia and Oman) still need to depend on expats to run their economies as there are still not enough citizens to fill all jobs required for Dubai to be a global financial hub as an example.</p>
<p>However, Saudi Arabia in particular has been successful in relying less on expats in the last 5-6 yrs. The country used to employ ~11 million foreign workers around 2013 and 2014, and now it has about 6.5 million foreign workers in the country. It successfully was able to do this by encouraging women and removing restrictions, which allowed women to replace many jobs formerly held by expats (e.g. barista, restaurant workers, etc) where in the past you would never see locals working at, are now filled by local women.</p>

CC BY-SA 4.0
2021-11-30T20:01:25.683Z
Hi, welcome to Economics:Stack Exchange. Please consider improving the answer by adding references from reputable and scholarly sources. As many other science stacks do, we require formal proofs, statistical evidence or links to external sources for answers making claims which are not common knowledge. Unsourced material can be edited or deleted. For more details see our [help center](https://economics.stackexchange.com/help/how-to-answer) and [FAQ on community standards for answers](https://economics.meta.stackexchange.com/questions/2113/faq-on-community-standard-for-answers)
1muflon1
CC BY-SA 4.0
2021-12-01T11:59:13.873Z
To your first point, isn't 'all jobs required' to run the economy a function of the population? If so, why should this number be arbitrarily high for UAE which had a very small local population on oil discovery?
I admit that at this point the question deviates slightly from strict economics (I tried searching for a geopolitics StackExchange), but is dilution of the citizenry to extremes (only 10% nationals in UAE for example) a good sacrifice to be made for rapid economic progress?
FL44ME
CC BY-SA 4.0
2021-11-30T19:28:31.723Z
2021-11-30T19:28:31.723Z
nesta13
<p>Imagine a Y versus X graph. Cost versus benefit. The cost is the wage; the benefit is output. Potential employees are the dots on the graph. The ordinary least squares line has one endpoint low and to the left and another endpoint high and to the right.</p>
<p><a href="https://i.sstatic.net/pNbRx.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/pNbRx.png" alt="graph" /></a>
To answer your question...</p>
<p>Any employer <strong>including those at oil exporting countries</strong> will try to hire below the line and <strong>some of them are immigrants</strong>. You are asking if these countries need these immigrants. While there might be national level policies governing overall numbers of immigrants, at the level of the individual hiring decision apparently there is a need because otherwise the decisions would have turned out otherwise.</p>

CC BY-SA 4.0
2021-12-01T06:45:10.740Z
(-1) This is a "one size fits all" answer.
Giskard
CC BY-SA 4.0
2021-12-01T06:46:23.380Z
@Giskard Sometimes the correct answer is a universal one. Anyway, this directly addresses the question because the answer is "some of them are immigrants".
H2ONaCl
CC BY-SA 4.0
2021-12-01T06:47:34.083Z
Yes, sometimes.
Giskard
CC BY-SA 4.0
2021-12-01T11:56:56.423Z
This does not really answer the question.
FL44ME
CC BY-SA 4.0
2021-12-01T21:43:22.527Z
@FL44ME I am describing rational behaviour. Are you suggesting that employers do not need to be rational?
H2ONaCl
CC BY-SA 4.0
2021-12-02T07:57:30.093Z
I don't think you understood the question. Read the second part of the question.
FL44ME
CC BY-SA 4.0
2021-12-02T16:42:28.680Z
@FL44ME Stackexchange does not intend to support a multiple question format. Questions can be closed for being ill formed by the standards of this website.  I counted 5 question marks in the body of the text. The question in the title is the one I answered.
H2ONaCl
CC BY-SA 4.0
2021-12-02T16:56:49.503Z
The fact that some immigrants fall below the line does not by itself indicate that they are "needed". If enough locals also fall below the line, the immigrants could be removed from the employment pool entirely and have zero effect on a company's ability to hire employees of high relative worth. You'd need to show that the local workforce is insufficient to meet demand, or that immigrants are more likely to fall below the line than locals.
Nuclear Hoagie
CC BY-SA 4.0
2021-12-02T22:21:54.863Z
@H2ONaCl It is a single question with some nuance, perhaps this might not be the right stackexchange for it (I couldn't find one more appropriate) but I don't think the questions are so divorced from each other so as to warrant your prompt. As Giskard pointed, your answer is too broad to be helpful. I am assuming you were able to read the rest of the post even though you think those are multiple questions, and if you did, then that should lend you some background to the question.
FL44ME
CC BY-SA 4.0
2021-12-02T22:30:52.830Z
_"......at the level of the individual hiring decision apparently there is a need because otherwise the decisions would have turned out otherwise."_ This statement is also quite dubious if not just wrong. By this method, one can never question the market because it is always right. The point of this question is not to change something but to inquire into the mechanics of this labour market structure. Your answer basically amounts to "That's just the way it is", which is pointless.
FL44ME
CC BY-SA 4.0
2021-12-02T23:47:33.227Z
@NuclearHoagie , The assumption of homogeneity of the group qualities of prospective employees world-wide is sufficient to explain what is happening. At the least we can assume 2 groups: local and not local.
H2ONaCl
CC BY-SA 4.0
2021-12-03T04:55:18.737Z
@FL44ME It wasn't me that voted to close this question. To suggest the market is doing the right thing for itself is not pointless. In fact you raised the possibility yourself when you asked "Is it simply demand for labour?"
H2ONaCl
CC BY-SA 4.0
2021-12-03T05:02:10.443Z
@FL44ME Your other questions don't prompt me because I don't understand them. "what interests are stopping the country from simply selling oil and enriching the national population sustainably". Are you saying worker visas are unsustainable? Are you saying they are not already enriching themselves? "Is any semblance of a national identity even important for the local populace if it continues to use the wealth created by the expats without granting expats any of the [monetary] benefits granted to citizens?" Are you saying wages to foreigners are not sufficient benefit?
H2ONaCl
CC BY-SA 4.0
2021-12-03T09:38:14.427Z
@H2ONaCl You misunderstood my question then. _'simply demand for labour'_  is referring to unavailability of local workforce in numbers that are necessary even for basic infrastructure to exist, as nesta13 pointed out in their answer. Wages to foreigners are a sufficient benefit insofar as you choose to justify it via the circular retrospective supply-demand view as you have done in your answer before. However, the main premise of the question is whether or not it is a sound economic decision to have a very large expat population (90%+) in a country when you have the resources for otherwise.
FL44ME
CC BY-SA 4.0
2021-12-03T09:38:41.537Z
And no, the answer is not 'it must be a good decision otherwise why would they do it'.
FL44ME
CC BY-SA 4.0
2021-12-12T03:39:09.747Z
My answer is based upon an assumption of rational individual economic decision makers. What are your criteria for determining if an economic decision is sound? In other words, what is your definition of a sound economic decision?
H2ONaCl
CC BY-SA 4.0
2021-12-01T06:30:16.980Z
2021-12-02T16:43:50.140Z
2021-12-02T16:43:50.140Z
H2ONaCl
<p>In particular, why did/do the smaller states in the GCC need expats in their country? Ignoring the history of the country prior to oil discovery (which can be approximated for many of the smaller GCC countries with small populations and insignificant economies), what interests are stopping the country from simply selling oil and enriching the national population sustainably?</p>
<p>Is it simply demand for labour? Are there any optimal expat population levels for these countries at which labour remains cheap while a non-minority national populace remians? Is any semblance of a national identity even important for the local populace if it continues to use the wealth created by the expats without granting expats any of the [monetary] benefits granted to citizens?</p>

<labor-economics><nonexpert><international-economics>
Why do oil-rich countries need expats?
FL44ME
# Why do oil-rich countries need expats?

(Asked by: username_0 on 2021-11-26)

In particular, why did/do the smaller states in the GCC need expats in their country? Ignoring the history of the country prior to oil discovery (which can be approximated for many of the smaller GCC countries with small populations and insignificant economies), what interests are stopping the country from simply selling oil and enriching the national population sustainably?

Is it simply demand for labour? Are there any optimal expat population levels for these countries at which labour remains cheap while a non-minority national populace remians? Is any semblance of a national identity even important for the local populace if it continues to use the wealth created by the expats without granting expats any of the [monetary] benefits granted to citizens?

**Tags:** labor-economics, nonexpert, international-economics


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## 2 answers

### Answer by username_1 on 2021-11-30. Score: 1

First, combining all GCC countries in one bucket is the wrong approach of thinking about this, as it does not make sense to put Saudi Arabia with a population of 34 million (about 22 million are citizens) in the same group as Bahrain or Kuwait and others where nationals are less than 1 million.

Now to answer your question, the smaller GCC countries (i.e. all but Saudi Arabia and Oman) still need to depend on expats to run their economies as there are still not enough citizens to fill all jobs required for Dubai to be a global financial hub as an example.

However, Saudi Arabia in particular has been successful in relying less on expats in the last 5-6 yrs. The country used to employ ~11 million foreign workers around 2013 and 2014, and now it has about 6.5 million foreign workers in the country. It successfully was able to do this by encouraging women and removing restrictions, which allowed women to replace many jobs formerly held by expats (e.g. barista, restaurant workers, etc) where in the past you would never see locals working at, are now filled by local women.

> **Comments:**
> **username_2**: Hi, welcome to Economics:Stack Exchange. Please consider improving the answer by adding references from reputable and scholarly sources. As many other science stacks do, we require formal proofs, statistical evidence or links to external sources for answers making claims which are not common knowledge. Unsourced material can be edited or deleted. For more details see our [help center](https://economics.stackexchange.com/help/how-to-answer) and [FAQ on community standards for answers](https://economics.meta.stackexchange.com/questions/2113/faq-on-community-standard-for-answers)  
> **username_0**: To your first point, isn't 'all jobs required' to run the economy a function of the population? If so, why should this number be arbitrarily high for UAE which had a very small local population on oil discovery? I admit that at this point the question deviates slightly from strict economics (I tried searching for a geopolitics StackExchange), but is dilution of the citizenry to extremes (only 10% nationals in UAE for example) a good sacrifice to be made for rapid economic progress?  

---

### Answer by username_3 on 2021-12-01. Score: -1

Imagine a Y versus X graph. Cost versus benefit. The cost is the wage; the benefit is output. Potential employees are the dots on the graph. The ordinary least squares line has one endpoint low and to the left and another endpoint high and to the right.

[![graph](https://i.sstatic.net/pNbRx.png)](https://i.sstatic.net/pNbRx.png)
To answer your question...

Any employer **including those at oil exporting countries** will try to hire below the line and **some of them are immigrants**. You are asking if these countries need these immigrants. While there might be national level policies governing overall numbers of immigrants, at the level of the individual hiring decision apparently there is a need because otherwise the decisions would have turned out otherwise.

> **Comments:**
> **username_4**: (-1) This is a "one size fits all" answer.  
> **username_3**: @username_4 Sometimes the correct answer is a universal one. Anyway, this directly addresses the question because the answer is "some of them are immigrants".  
> **username_4**: Yes, sometimes.  
> **username_0**: This does not really answer the question.  
> **username_3**: @username_0 I am describing rational behaviour. Are you suggesting that employers do not need to be rational?  
> **username_0**: I don't think you understood the question. Read the second part of the question.  
> **username_3**: @username_0 Stackexchange does not intend to support a multiple question format. Questions can be closed for being ill formed by the standards of this website.  I counted 5 question marks in the body of the text. The question in the title is the one I answered.  
> **username_5**: The fact that some immigrants fall below the line does not by itself indicate that they are "needed". If enough locals also fall below the line, the immigrants could be removed from the employment pool entirely and have zero effect on a company's ability to hire employees of high relative worth. You'd need to show that the local workforce is insufficient to meet demand, or that immigrants are more likely to fall below the line than locals.  
> **username_0**: @username_3 It is a single question with some nuance, perhaps this might not be the right stackexchange for it (I couldn't find one more appropriate) but I don't think the questions are so divorced from each other so as to warrant your prompt. As username_4 pointed, your answer is too broad to be helpful. I am assuming you were able to read the rest of the post even though you think those are multiple questions, and if you did, then that should lend you some background to the question.  
> **username_0**: _"......at the level of the individual hiring decision apparently there is a need because otherwise the decisions would have turned out otherwise."_ This statement is also quite dubious if not just wrong. By this method, one can never question the market because it is always right. The point of this question is not to change something but to inquire into the mechanics of this labour market structure. Your answer basically amounts to "That's just the way it is", which is pointless.  
> **username_3**: @NuclearHoagie , The assumption of homogeneity of the group qualities of prospective employees world-wide is sufficient to explain what is happening. At the least we can assume 2 groups: local and not local.  
> **username_3**: @username_0 It wasn't me that voted to close this question. To suggest the market is doing the right thing for itself is not pointless. In fact you raised the possibility yourself when you asked "Is it simply demand for labour?"  
> **username_3**: @username_0 Your other questions don't prompt me because I don't understand them. "what interests are stopping the country from simply selling oil and enriching the national population sustainably". Are you saying worker visas are unsustainable? Are you saying they are not already enriching themselves? "Is any semblance of a national identity even important for the local populace if it continues to use the wealth created by the expats without granting expats any of the [monetary] benefits granted to citizens?" Are you saying wages to foreigners are not sufficient benefit?  
> **username_0**: @username_3 You misunderstood my question then. _'simply demand for labour'_  is referring to unavailability of local workforce in numbers that are necessary even for basic infrastructure to exist, as username_1 pointed out in their answer. Wages to foreigners are a sufficient benefit insofar as you choose to justify it via the circular retrospective supply-demand view as you have done in your answer before. However, the main premise of the question is whether or not it is a sound economic decision to have a very large expat population (90%+) in a country when you have the resources for otherwise.  
> **username_0**: And no, the answer is not 'it must be a good decision otherwise why would they do it'.  
> **username_3**: My answer is based upon an assumption of rational individual economic decision makers. What are your criteria for determining if an economic decision is sound? In other words, what is your definition of a sound economic decision?  

---

