Despite growing scholarly interest in the impact of the digital economy on economic recovery in the midst of the current global crisis and regional development situations, research on the effects of the global crisis on developing digital economies in the Gulf Cooperation Council Region (GCC) and the resulting future uncertainty is limited. Thus, this chapter examines the developing GCC countries' digital infrastructure, openness, innovation environment, competitiveness, and digital divide to determine how the digital economy affects economic growth during a global crisis. This chapter demonstrates how the GCC economies are still developing and attempting to diversify away from oil, with the digital economy serving as a major driving force in achieving the region's goals. Furthermore, while the recent pandemic has harmed GCC digital industries, it has also increased demand, creating an excellent opportunity to develop the region's digital infrastructure to compete with developed digital economies. Policy implications have been proposed as a potential impact mechanism.
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The Internet, big data, 5G, and artificial intelligence (AI) are just a few of the digital technologies that are hastening deep integration across industries and ushering in the era of the digital economy (Ali, 2019, 2020; M. Ali, 2019a, 2019b, 2021; Ali, 2022; Ali & Abdel-Haq, 2021; Ali & Edghiem, 2021; Ali et al., 2022; M. B. Ali, 2021; Ali et al., 2020a, 2020b; Afonasova et al., 2019; Williams, 2021). The digital economy has also become a critical area of cooperation for developing countries, particularly those operating in the Gulf Cooperation Council (GCC) countries (Aidrous et al., 2021). The GCC is a regional organisation and political and economic alliance comprised of six member states: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) (Al-Sayed, 2013). These member countries are developing countries that are currently undergoing socioeconomic, political, and environmental reform in order to compete on the global stage with thriving developed economies.
The digital economy can optimise the industrial structure and increase employment opportunities by leveraging ICT, the Internet, and other forms of smart technology, thereby boosting growth. Although global crisis situations such as the recent COVID-19 pandemic have enabled the digital economy to reduce economic losses and accelerate economic recovery through online entrepreneurship and other digital business opportunities, they have also caused significant disruptions to the global economy due to their effects on production, supply chains, businesses, and financial markets (Gozgor & Lau, 2021; Zhai et al., 2021). The efforts of policymakers to limit social mobility by imposing stringent regulations have the unintended consequence of dampening overall economic activity.
The digital economy, on the other hand, has created a new window of opportunity for the digital transformation of other industries due to its technological advantages and inter-industry integration. In comparison to the traditional economy, the digital sector acts as a vital stabiliser and is thus regarded as a critical response to the crisis and a potential economic growth driver. However, developing countries in the GCC with weaker infrastructures and social development continue to have vastly different levels of digital economic development due to the process of digitalization being often seen simply as the introduction of specific technologies and not as a way of transformation, as well as the process of transformation being hampered by established obsolete technologies and a lack of personnel (Aidrous et al., 2021), resulting in unequal digital development opportunities.
In light of the ongoing trend toward digital transformation amidst global crises (e.g., regional conflicts, pandemics, famine, and crime), it is critical to assess the state of the digital economy in developing countries in the GCC to shed light on the mechanism by which it contributes to economic growth and to define the effects of global crises on digital economy-related sectors. This can serve as a policy reference for bridging the “digital divide” between developing and developed countries and strengthening digital economic cooperation among developing countries amidst global crises.