GDP and Standard of Living - Qatar - Case Study Example

Name Institution Professor Date Part A – GDP and standard of living Introduction Qatar is a country which is located on the western side of the Asian Continent. This country occupies a small peninsula on the coast at the northern side of the peninsula in the Arab area. It borders Saudi Arabia to its south and the other part of the country appears to be confined in the famous Arabian Gulf. Qatar is currently the world's richest country due to the fact that it's endowed with the largest amount of natural resources such as petroleum and the natural gas (MDPS, 15). In this section of the report, I will give the history of the country's economic background, describe its demographics, show the trend of its GDP over the past few years and conclude by commenting on the country's standards of living at the end of the paper. Qatar's Gross Domestic Product was 164.6 billion USD worth in the year 2015. Qatar's GDP accounts for 0.27% of the total economy of the world. The average GDP for the country between the hear 1970 and 2015 were 37.71 billion USD (MDPS, 15). The lowest of the period was recorded in the year 1970 (0.3 billion USD) and the highest was 206.20 billion USD of the year 2014. The graph below represents the trend of the GDP of the country from the year 2006 to the year 2015 (World Bank, 2016). It is clear from the graph that there has been unstable growth in the country’s economy in for the period between the year 2007 and the year 2015. I tend to think that the country’s greater dependence on the oil and gas sectors contributes to this unstable nature of the growth of the country’s economy. Qatar's government has been using the industry as its integral part in the planning of diversification of the economy and the maximization of its huge reserves of natural gas. The government carefully plans on the various industrial developments with the biggest emphasize diverted to the export industry (Sloman, J. and Wride, 156).The government has also emphasized in the growth of the energy industry which is the key industry of the country's economy. Its emphasis on these industries has led to considerable growth and development of the country's economy over the last three years. In the year 2007, the country's manufacturing sector contributed largely to its GDP and the government started putting more efforts to the sector. Up to now, the sector contributes more than 10% of the country’s GDP (MDPS, 50). The supply of fertilizers and petrochemicals also occupy a large proportion of the country's GDP and the country's government makes efforts every time so as to ensure that there is a fast growth of the industries that supply the products so as to ensure that their contribution to the growth of the economy is maximized. Qatar got its independence from the British in the year 1971. Since 1971, the country has been ruled by the Al-Thani family. Sheikh Tami who has ruled the country since the year 2013 emphasizes critical domestic issues such as enhancement of health care, education, and infrastructure. Arab countries' economies are always interfered by the spring uprisings of the Arabs. However, the Qatar has avoided this problem largely so as to ensure that their economy remains in the planned state of growth. The oil reserves of this country that are proven exceed even 25 billion barrels. The country's natural gas reserves are ranked in the third position in the world (Feese, 328). The country just won a bid related with hosting Word Cup in the year 2022. The winning of this bid has impelled the government to expedite large projects in the infrastructure including light railway transportation, roads, stadiums and new ports. Non-Qataris' property rights are limited. In practice, there is no independence of the judiciary. The country's judicial system is made up of civil law and Sharia courts. Sharia courts deal with the family laws. Civil courts of the law deal with civil, commercial and criminal cases. The manner in which these courts function has enabled the country to provide legal services that favor the economic growth of the country. However, there have been critics about the government's transparency when it comes to procurement (Sloman, J. and Wride, 56).Lack of transparency in the government when it comes to procurement has favored personal connections in the country hence leading to a wide gap of poverty due to increased income inequality among the citizens of the country. Inequality has been acting as a stabling block of the country towards a faster and stable rate of economic growth. Qatar has also faced corrupt practices’ allegations in the process of securing the bid to host the Word Cup in the year 2022. Corruption has also acted as a stabling block towards achieving a higher, stable and faster rate of economic growth. The graph below shows the percentages of the property rights, judicial effectiveness and government integrity of the country (Feese, 328). There is the absence of domestic corporate and income taxes in the country. Foreign corporations that operate in the country are subjected to 10% flat corporate rate. The current overall burden of tax in this country is equal to 6.3% of the country’s domestic income (Sloman, J. and Wride, 56). 31% of the country’s Gross Domestic Product (GDP) goes to the government spending each and every year for the last three years while 15% of the GDP goes to the country’s budget surplus. Public debts account for 35.8% of the country's total GDP. The information about the tax burden, government spending, and the country’s fiscal health is summarized in the graph below (Feese, 328). Business launching and license obtaining process of this country is more streamlined. Primarily, the country’s labor force is made up of workers that are experts and is governed by employment rules that are flexible. In the year 2016, there was the scrapping of the country's fuel subsidies (World Bank, 2016). This scrapping was necessitated by the drop in the revenues received from the liquefied natural gas and the critics by the emir who were against the mindset of dependency. The government has been subsidizing the quarter airways owned by the government. This has led to increased rate of economic growth as business persons and capital flow easily from and to the country at the minimum cost possible. This has encouraged many investors in the country who have participated in the process of increasing the rate of the country's growth. Trade is very important to the economy of the country. 91% of the country’s GDP is occupied by the value of imports and exports taken together. The average percentage of the tariff rate applied in the country is equal to 3.4%. The country’s economic sectors’ foreign investment is capped. The enterprises owned by the country have been distorting the economy for the last 15 years. However, the government is currently changing the management boards of the enterprises so as to ensure that they contribute positively to the country’s economic growth. The country’s banking sector has remained stable for the last three years and competitive (Feese, 329). The government amends investment laws after the end of each and every financial year so as to attract huge foreign investments in the country’s banking sector. The gas and the oil sectors have been the Qatar's economy's major drivers. These sectors account for at least 50% of the total revenue of the government each year. The dependence to these two sectors has left the country subject to various external shocks despite the fact that there has been an economic diversion in the country brought about by the rapid growth in the country's financial and manufacturing services. Low prices of oil have subjected the economy of this country to a fiscal deficit (the first one in a period of 15 years). However, the country has adopted structural reforms that are deeper so as to enhance competitiveness and improve their key sector, oil sector (World Bank, 2016). Last year, 2016, the country managed to sell bonds worth $ 9. This was the largest historical bond issue in the Middle East. The major aim of selling these bonds was to cover the country's budget deficit (Feese, 329). The government of this country takes into consideration the fact that investment in the infrastructure boosts the other sectors hence channeling the country to faster and stable rate of economic growth. In July 2016, the country’s population was 2,258,283. The age structure can be described by the pie chart below: Potential support, elderly, youth and total dependency ratios are 70.4%, 1.4%, 18.6% and 20.1% respectively. Population growth rate was 2.64% in the year 2016. Death and birth rate of the country are about 1.5 and 9.7 per 1,000 populations per annum (Feese, 329).The net rate of migration for the year 2016 was 18.2 migrants per 1,000 individuals. 92% of the country’s total population lives in the urban centers and the annual rate of the urbanization has been 6.02% for the last two years. The sex ratio of males to female is 1.02 at birth, 1.03 for individuals ranging between 0-14 years, 2.69 for individuals ranging between 15-24 years, 4.91 for individuals ranging from 25-54 years, 3.38 for individuals ranging between 55-6 years and 1.71 for individuals with 65v years of age and above. Generally, the sex ratio of males to females for the total population is 1.77 (Sloman, J. and Wride, 56). Life expectancies at birth of the Qataris are 76.7 years for the male, 80.8 years for the female and 78.7 years for the total population. Infant fate of mortality per every thousand live births is equal to 6.4 deaths for the male, 6 for the female and 6.2 for the total population. The total rate of fertility is equal to 1.9 children per woman (Word Bank). Conclusion Based on the information above about the economy of Qatar, one can clearly estimate the country's standards of living. There is a low rate of unemployment in the country (0.4%) despite the fact that there is large labor force in the country (1.64 million) compared to its geographical area. GDP per capita is $ 71, 481. This implies that there is an equal distribution of income in the country (Sloman, J. and Wride, 56).There was no people living under the poverty line in the year 2015. Work by the Qataris households is the major income source in the country. The patterns of consumption vary according to the levels of well-being. The average inflation rate has been 1.6% for the last three years. The government manages its high GDP in the improvement of the health and education sectors. As a result, there are high qualities of health services and education in the country. High qualities of health have led to increased rate of life expectancy at birth (78.7) (MDPS, 57-58). Generally, there are high standards of living in the region since wealth and income are equally distributed and the people living under the poverty line are very few. Works Cited. Ministry of Development Planning and Statistics, MDPS. Measuring the Standard of Living in Qatar Household Expenditure and Income survey 2012/2013, 2015. Pp. 1-66 Web. Feese, Daniel. The Index of Economic Freedom" the Heritage Foundation concept. GRIN Verlag, 2011. Pp. 328-329.Print Sloman, J. and Wride, A., (. Economics, 7th Edition, FT Prentice Hall. 2009. Print. World Bank Economic Growth of Nations. 2016 Read More