The Middle East is viewed by investors as a region with a very high potential return on investment. The current rise in the price of oil will be beneficial to the countries’ revenues in general, as long as it is sustainable and doesn’t hit the world economy by creating a chain reaction of asset bubbles and inflation. For 2011, the International Monetary Fund forecasts economic growth in the Middle East of 5.1%. The planned diversification of the economies of the oil-rich countries creates consistent demand for competent business leaders. Predictably, the richest states are the ones with the most vibrant MBA job markets. According to United Nations Conference on Trade and Development (UNCTAD), for the last two decades Saudi Arabia, UAE and Qatar have attracted approximately 80% of the foreign direct investments made in the Gulf Cooperation Council countries. We are going to review some of the countries in the Persian Gulf. Qatar, UAE, Kuwait, Bahrain, Oman and Saudi Arabia are the main MBA job centres in the region and we will focus on five of these countries.

The Qatar model

Qatar is one of the most affluent countries worldwide. In 2010 its GDP rose by 19.4 % and reached $126.5 billion (official exchange rate)*. A GDP per capita of $145,300 (PPP) ranks its population of 841,000 as first in the world, and amongst the wealthiest consumers. Qatar’s economy is heavily dependent on its natural resources, with the oil and gas sector making up about 50% of the country’s GDP. Qatar also accounted for the highest average salary increase among the Gulf Cooperation Council countries in 2010.

In the last two decades it has attracted $28.1 billion of foreign direct investments. In 2009, when the FDI inflow towards most of the countries in the region was contracting and stagnating, Qatar’s FDI was $8.7 billion, more than doubling the previous year’s investments.

The country does not have the range of business schools offered by the United Arab Emirates. This is partially because of the smaller population and territory of the Gulf nation. The economy of the UAE is also more diversified. Many citizens of Qatar fly to Abu Dhabi or Dubai to attend the UAE’s business schools. HEC Paris started an Executive MBA program in Doha in February 2011 after becoming the first member of the Qatar Foundation Management and Research Center. The profile of a typical student in its program is a senior manager with about 10 years of experience.

Qatar is an interesting place for international business schools and is likely to witness an increase in its MBA programs. The chief challenge for business education over the next few decades will be training leaders who will create and run an economy less dependent on the natural resources. However, this is also a test for the country’s politicians.

A further boost to the local business will be given by the 2022 World Soccer Cup. The official estimates show that $55 billion will be spent on infrastructure and stadiums for the event, but that figure is likely to increase. Big projects include the $4 billion Qatar-Bahrain friendship bridge and Qatar’s metro system.

The country has a restriction on foreign ownership of more than 49% in certain business activities, although permission may be granted for bigger share with the state’s approval. There is no income tax on individuals and domesticallyowned businesses in Qatar. A new 10% flat corporate tax was introduced in 2007 and a tax of 35% applies to companies that exploit natural resources. The country is a monarchy, with the Al-Thani family ruling since its declared independence from Britain in 1971. The College of Business and Economics at Qatar University won an accreditation from AACSB in January 2010. The school offers the MBA as a general management degree to local and international students. * Data is drawn from the CIA factbook and the 2011 Index of Economic Freedom.

Economic diversification in the United Arab Emirates

The United Arab Emirates is a federation of seven states. Following independence from Britain in 1971, Abu Dhabi, Ajman, Dubai, Fujairah, Sharjah, and Umm al-Qaiwain together formed the UAE. The following year Ras Al-Khaimah was also included in the federation. The seven countries in the UAE are absolute monarchies and there are no political parties. The economy of the country has seen rapid development, mainly due to the discovery of huge oil reserves in the 60s. Oil production is concentrated in Abu Dhabi, which accounts for 90% of the black gold output and also for roughly the same proportion of the Emirates territory. Over time, the oil revenues have gradually helped the country build its social and physical infrastructure. Government presence in the economy is strong with numerous restrictions, subsidies and state companies. The GDP (official exchange rate) is $239.7 billion – an increase of 2.6 % in 2010 after the previous year’s contraction of 2.7% – and the GDP per capita (PPP) is $40,200. The average Western mid-level manager working in the country receives a median salary of $9,400 per month, and the Emirati manager at the same level takes $7,100.

The role of business education in the country, beside the purely academic role, is to build networks amongst graduates and to further internationalize the business landscape of the UAE. The foreign investments form a limited share of the GDP and do not play a central role for the economy. This, combined with the traditionally strong ties amongst local businesses, elite families and the government, may create conditions for isolation. The many Western and regional non- Emirati graduates studying in the UAE’s business schools could contribute to boosting the international profile of the economy and to revitalizing and diversifying its connections.

As in Qatar, foreign business ownership is limited to 49% except in the so-called free zones designed for foreign investors. Oil and gas production makes up about 25% of the GDP – an indication that the UAE is achieving success in its economic diversification. Dubai, which was hit hard by the crisis, is known as the financial and tourist centre of the country. Despite the heavy cloud cast by the problems caused by the collapse of the real estate prices and the debt of Dubai World (the state investment company), the city seems to have rebounded economically to a certain extent. However, reaching the pre-crisis levels and retaining the confidence of investors will take more time and effort. Expatriates constitute around 90% of the 1.8 million-strong population of Dubai, and around 85% of the working force of the whole country. There are concerns over the human rights and the situation of foreign workers in some sectors.

The Dubai London Business School offers the Executive MBA. The school has a clear policy of encouraging diversity. 50 students from 24 countries are in the graduating class of 2011. Hult International Business School started its one-year MBA in Dubai on September 1st, 2008. The 27- year old American Bentley Varghese, a student on Hult’s MBA program, says:

“While most other business graduate schools offer a 2 year course, Hult offers a reputed degree in just 1 year. This means I can get back into the work force in the half the time. Furthermore, this reduces the cost elements of my MBA pursuit. In my class alone in the Dubai campus we have representation from over 30 countries. Being part of the future "global village" requires that individuals be capable of working with people from different regions, cultures from all over the world and there is no better way to experience it than in a classroom working together on projects and discussions.”

Cass Business School launched its EMBA in Dubai in September 2007 and offers specialization in Islamic finance. Another excellent school in the UAE is the prominent INSEAD campus at Abu Dhabi.

Saudi Arabia’s perspective

With an estimated 264.6 billion barrels of oil, Saudi Arabia controls 20% of the planet’s total oil reserves. Revenues from black gold form 45% of its GDP. It is an absolute monarchy, there are no political parties and generally no elections are held (with the exception of the 2005 municipal elections). The GDP of the country rose by 3.8% in 2010 (official exchange rate) to $434.4 billion. GDP per capita (PPP) for the country is $24,200. The median salary for Western midlevel managers in the country is $9,600 per month, while the average Saudi manager takes $5,200.

The business schools in the country are not sufficiently internationalized. Despite some recent interest, international business schools have not been very eager to set up campuses in this desert kingdom, despite the lucrative opportunities there. The cultural differences of Saudi Arabia, the relatively closed character of the business communities and the segregation between men and women most likely played a role in the country’s unrealized potential in this particular area. In an interview for the Wall Street Journal, director of the Saudi Oxford Advanced Management and Leadership Programme Lalit Johri said: "…I would think the only way in which the international business schools can contribute value in Saudi Arabia is by customizing programs and understanding their context and embedding the cases into the Saudi economy and the Saudi social fiber. Any international school which tries to bring off-theshelf products is likely to fail in that market."

The tax regimes for businesses with foreign ownership vary according to the foreign share in the enterprise. The country’s General Investment Authority licenses all non-native investment projects, and according to the 2011 Index of economic freedom “foreign investors must take local partners in certain sectors.” Non-nationals in the country pay a flat tax of 20%. With official unemployment at 10.8% (data is available only for male unemployed), the government is taking measures to increase the hiring of Saudi citizens and has announced big infrastructure plans.

One of the country’s most prestigious schools is the King Fahd University of Petroleum and Minerals. Its part-time EMBA is a two-year degree. Applicants need to have minimum of eight years’ experience, including 3 years at medium or high level management. The required professional background for the MBA program is at least one year of fulltime experience. The College of Industrial Management that offers these programs is accredited by the AACSB. The University is open to male candidates only. Another school with accreditation (from AMBA) in Saudi Arabia is the King Abdulaziz University in Jeddah, established in 1967. It is open to both male and female students; each sex resides in a different campus. The faculty of Economics and Administration offers a full-time MBA and a part-time EMBA.

The Kuwait way

Kuwait is a constitutional monarchy with a partially democratic system. Its GDP rose by 3.2% in 2010 to $117.3 billion. Oil accounts for around 50% of the Kuwaiti GDP and 95% of its exports. Kuwaiti oil reserves are estimated to make up 9% of total world reserves. The country doesn’t tax individual income or businesses and doesn’t have a value added tax. Companies with foreign participation are subjected to a flat tax of 15%. GDP per capita (PPP) stands at $51,700. Demographically, Kuwait is not so different from the other Persian Gulf countries in that its population contains a large proportion of non-nationals. Around 3 million people live in the country; roughly 60% of the working force consists of expatriates.

Kuwait, like most other economies in the GCC, needs educated business leaders and entrepreneurs that will find and develop new sectors beyond natural resources to secure the country’s long-term prospects. In 2010, the government announced a four-year development plan worth 104 billion dollars in an attempt to boost revenue from non-oil sectors to between 13 and 14 billion dollars from the current 3.5 billion, and to enhance the role of the private sector.

The Kuwait – Maastricht Business School was founded in 2003 in partnership with the Maastricht School of Management. The College of Business Administration in the Kuwait University earned its accreditation from the AACSB in April 2005. The admission requirements for the MBA program include a minimum GPA of 2.67 and TOEFL of at least 550 points. The average result achieved by successful applicants for GMAT is 520.

Bahrain looking towards the future

With a GDP (official exchange rate) of $21.73 billion, GDP per capita (PPP) of $40,400 and a population of 1,214,705, Bahrain ranks amongst the wealthiest countries in the Persian Gulf. Despite the diversification of the economy, the depleting oil reserves remain an important source of revenue constituting more than 60% of exports. Bahrain has developed a competitive financial services sector accounting for approximately 25% of the GDP, a successful tourism industry, and strong aluminium production. The country has managed to reduce the oil sector contribution to the GDP to between 10 and 15%.

Business education in Bahrain is currently not very well developed and has potential for growth. Hull University Business School offers a part-time MBA through the Management Development Centre International in Manama. It consists of 12 modules taken over around 18 months, followed by a 6-month dissertation period. The University of Glamorgan and the University College of Bahrain also have MBA programs in Bahrain.

Managers in this Middle Eastern country will have to continue along the path to diversification, as it is estimated that the oil reserves of Bahrain will run out in 10 – 15 years. The current political turmoil in the country affects business prospects. Moritz Kraemer, Managing Director of sovereign ratings for the Middle East, Europe and Africa for Standard and Poor’s commented to the New York Times: “diversification, particularly into the financial sector which is sensitive to shocks, will be a challenge for a country that depends highly on oil, but is not an oil superpower like Saudi Arabia with reserves for many years to come.”