International Marketing Country Study: Qatar's Economy and Trade

Overview of Qatar: History and Political Leadership

Qatar has been ruled by the Al Thani family since the mid-1800s, but the country has experienced dramatic changes in its actual leadership in recent years. Today, Qatar has transformed itself from a poor British protectorate famed mostly for its pearls into a modern independent state that enjoys significant oil and natural gas revenues (Qatar, 2005). Reminiscent of the charges leveled in the UN oil-for-food program, the Qatari economy was severely damaged during the last two decades of the 20th century by illegal activities carried out under the current amir's father. In 1995, the amir's son, Amir Hamad bin Khalifa Al Thani, assumed the country's leadership from his father — who was in Switzerland at the time (Bahry, 1999) — in a "bloodless coup" that has proven to be in the country's best interests (Qatar, 2005).

In 2001, Qatar settled its longstanding border disputes with both Bahrain and Saudi Arabia, and the country's oil and natural gas revenues have given it one of the highest per capita incomes in the world (Qatar, 2005). In a referendum in April 2004, Qatari voters elected to make permanent a draft constitution providing for universal suffrage and a 45-member advisory assembly, thereby enabling parliamentary elections in 2004. At that time, it was also anticipated that Qatar would become the Middle East's first — and soon thereafter a global — leader in the production of gas-to-liquids, including an environmentally cleaner, reduced-emissions version of conventional diesel fuel (Anthony, 2005).

According to Tom Owen, the years since Sheikh Hamad bin Khalifa Al Thani assumed his leadership role have been good ones. During his tenure, Qatar emerged from relative obscurity to play an increasingly important role in the Persian Gulf region (Owen, 2000). The new emir committed to easing press censorship and pushing for greater transparency of government procedures, making major progress in both areas. While such pluralistic initiatives have pleased Qataris, they have caused Qatar's neighbors some significant concerns (Owen, 2000). Notwithstanding those concerns, the international community's consensus is that the Emir has more than fulfilled his promises: he has done much to raise Qatar's profile and prestige in the Gulf Cooperation Council (GCC) and in foreign policy matters in particular (Owen, 2000). The GCC is comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, and was established in 1981 (Delener, 1999). Given the unstable nature of the entire region, it is little wonder that the Qatari government has sought to navigate a political course that keeps it solidly aligned with the broader U.S.–Saudi position, while avoiding any initiative that might rekindle long-standing problems with its neighbors.

Geography, Demographics, and Society

Location. Qatar is situated in the Middle East on a peninsula bordering the Persian Gulf and Saudi Arabia.

Land area. Qatar is slightly smaller than the U.S. state of Connecticut (Qatar, 2005), with an area of 4,416 square miles (11,437 square km). This total includes a number of nearby small islands and the Hawar Islands — also claimed by Bahrain — in the Persian Gulf (State of Qatar, 2005).

Climate. Analysts at the U.S. Central Intelligence Agency (CIA) report that Qatar has an arid climate characterized by mild, pleasant winters and very hot, humid summers.

Terrain. The country's terrain is primarily flat and barren desert covered with loose sand and gravel (Qatar, 2005).

Population. Qatar's population was estimated at 863,051 as of July 2005 (Qatar, 2005).

Birth rates. According to 2005 estimates, the population growth rate in Qatar is 2.61% and the birth rate is 15.54 births per 1,000 population (State of Qatar, 2005). Upper-income countries of the Middle East — such as Kuwait, Qatar, Bahrain, the UAE, Saudi Arabia, Oman, and Israel — have a life expectancy above 72 years (Sahliyeh, 2000).

Ethnic groups. The ethnic composition of Qatar as of 2005 estimates is as follows: Arab 40%, Pakistani 18%, Indian 18%, Iranian 10%, and Other 14% (Qatar, 2005).

Major religions. The vast majority of the population — approximately 95% — is Muslim (Qatar, 2005).

Official language. Arabic is the official language of Qatar, although English serves as a lingua franca for many business and social purposes (Qatar, 2005).

Literacy rate. Given the country's affluence, the literacy rate in Qatar may surprise some international observers. Today, 89% of the Qatari population is considered literate — defined as those over the age of 15 who can read and write — with an almost even split between males (89.1%) and females (88.6%) (State of Qatar, 2005). There are signs that the Qatari government is actively working to improve this rate. Five branch campuses of prominent U.S. universities have been established in Qatar's new "Education City," surpassing the previous norm for cooperative academic arrangements between countries worldwide. Qatar has also been importing and applying these universities' exact academic standards for measuring achievement and awarding degrees in engineering, medicine, information technology, business administration, design, and educational planning (Anthony, 2005). As one source noted, "The breakthrough represented a first not only for the Arab countries, the Middle East, and the Islamic world but also for less-developed countries in general" (Anthony, 2005, p. 5).

Political system. Qatar continues to operate as a traditional monarchy; accordingly, there are no political parties (Qatar, 2005).

Legal system. In a traditional monarchy, the ruler's word remains the law of the land. While Qatar's "discretionary system of law" remains under the control of the amir, civil codes are being implemented. Despite these initiatives, Islamic law continues to govern family life and personal matters (State of Qatar, 2005).

Diplomatic representation in the United States. The Qatari government is represented in the United States through its chief of mission, Ambassador Nasir bin Hamad bin Mubarak al-Khalifa. Qatar also maintains a consulate general in Houston, Texas (Qatar, 2005).

Capital city. The capital is Doha (Ad-Dawhah), located on the east coast of the country. Doha was once a major center of pearling activity (Anthony, 2005).

Economy, Energy Resources, and Trade

Gross domestic product. Qatar remained first among GCC countries in annual GDP growth rate in 2004 (Anthony, 2005). According to 2004 CIA estimates, Qatar's real GDP growth rate was a healthy 8.7%, with a per capita GDP of $23,200 — approximately 80% of the leading West European industrial countries (State of Qatar, 2005).

Current economic condition. Several recent accomplishments have highlighted Qatar's continuing robust economic, social, and political development, together with the further modernization of its system of governance. For example, Qatar completed a Trade and Investment Framework Agreement with the United States, paving the way for further bilateral free-trade agreements with immense potential benefits. The U.S. stands to gain an assured long-term supply from one of the world's largest and least expensive sources of natural gas; for Qatar, the agreement represents a further strengthening of a strategic energy relationship with the world's largest economy (Anthony, 2005).

Proved oil reserves of 16 billion barrels should ensure continued output at current levels for 23 years. The country also holds more than 14 trillion cubic meters of proved natural gas reserves — more than 5% of the world total and the third largest in the world (State of Qatar, 2005). The Qatari government has launched long-term plans to develop its offshore natural gas reserves to ensure a continuing supply. As a result of high oil prices and increased natural gas exports in recent years, Qatar has enjoyed enormous trade surpluses and has emerged as one of the world's fastest growing, highest per capita income countries in the 21st century (State of Qatar, 2005).

Major exports. Oil and gas account for more than 55% of Qatar's GDP, approximately 85% of its export earnings, and 70% of government revenues. Other exports include petroleum products, fertilizers, and steel (Qatar, 2005). Total exports were approximately $15 billion (FOB) by 2004 estimates (Qatar, 2005).

Major imports. Qatar's major imports are machinery and transport equipment, food, and chemicals (Qatar, 2005).

Major trading partners. Qatar's major trading partners as of 2004 estimates are Japan (41.9%), South Korea (15.8%), Singapore (9.1%), and India (5.4%) (State of Qatar, 2005).

Qatar is also becoming more closely aligned with the UAE and Oman as a southern Gulf bloc develops in the region. The most visible reflection of this trend is the Dolphin Project — an initiative involving construction of a natural gas pipeline from Qatar's massive North Field gas reserves to Abu Dhabi, Dubai, Oman, and eventually Pakistan. Priced at $8 to $10 billion and built under the leadership of the UAE Offsets Group (essentially a branch of the UAE Ministry of Defense), this project is expected to greatly enhance the countries' economic interdependence with their neighbors (Owen, 2000).

Currency. The Qatari Riyal (QR) is the official currency; it is divided into 100 dirhams (A Dictionary of Business, 1996).

Major industries. Major industries include crude oil production and refining, ammonia, fertilizers, petrochemicals, steel reinforcing bars, cement, and commercial ship repair (Qatar, 2005).