Saudi Arabia has no income tax
Saudi Arabia famously has no income tax because it relies so heavily on oil revenue to fund government operations.
Snapshot · The Indicator from Planet Money
Why your neighbor might be paying less for their car
Explore episode
Jul 15, 2026
Where this was said
Listener Q1: How Do Economists Measure Gulf State Diversification?
At 4:40 · chapter starts 2:15
Mohammed Almarzuki, a 16-year-old UAE listener, sends in a question that punches well above its age: what economic figure captures a country reinventing its entire business model away from oil? Waylon Wong brings in Columbia University senior research scholar Karen Young, who immediately names the UAE as the standout case — the most diversified of all six Gulf Cooperation Council states. She walks through three measures economists use: non-oil GDP (flawed because petrochemicals standardly qualify as non-oil products), non-oil exports tracked via UN trade data (cleaner but blind to services like tourism and finance), and government revenue sources (the deepest signal — Saudi Arabia's famous lack of income tax shows how a state can hide oil dependency even with growing non-oil activity). Karen's verdict: 'None of them are really perfect, so we can kind of triangulate around them.' [1] — Waylon Wong "No single metric captures whether a Gulf State is truly weaning itself off oil. Economists must triangulate among non-oil GDP (flawed by pe…" 03:10 The answer is to use all three together for the clearest picture.
UAE: The Most Diversified Gulf Economy
A 16-year-old listener in Abu Dhabi asked what economists track to measure a country changing its entire business model. The answer: the UAE is already the most diversified of all six Gulf Cooperation Council states — and studying it requires three overlapping, imperfect metrics rather than one clean number.
UAE most diversified Gulf state
The UAE is considered the most economically diversified among the six Gulf Cooperation Council states.
3 measures for Gulf diversification
Economists use three imperfect measures to track Gulf State diversification: non-oil GDP, non-oil exports, and government revenue sources.
Three Ways to Measure Gulf Economic Diversification
No single metric captures whether a Gulf State is truly weaning itself off oil. Economists must triangulate among non-oil GDP (flawed by petrochemical loopholes), non-oil exports (misses services), and government revenue sources (a country can diversify its economy but still fund the state with oil money).
Non-oil GDP flaw: petrochemicals
Some oil-producing countries classify petrochemical products like plastics as non-oil GDP, making this measure less reliable.
The Non-Oil GDP Loophole: Petrochemicals
Non-oil GDP sounds clean, but oil-producing countries routinely classify petrochemicals — plastics and derivatives — as non-oil products. It's not cheating; it's the standard. But it means the headline 'non-oil GDP' figure can hide a lot of fossil-fuel dependency.
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