Beblawi, Hazem. "The Rentier State in the Arab World." Arab Studies Quarterly, Vol.9, No.4 (1987): 383-398.

Beblawi, Hazem. "The Rentier State in the Arab World." Arab Studies Quarterly, Vol.9, No.4 (1987): 383-398.

• Adam Smith distinguished between three types of income: wages, profits, and rents. Rent encompasses all income wrought from the ownership of property that exists without respect to market forces and that is imposed as a cost of use of that resource upon others (383).
• Rentiers have been attacked by a wide range of liberal and radical economists for the fact that their incomes do not create value and exist outside of market forces. They are criticized because they receive income for doing nothing, simply as a consequence of owning title to a resource, usually land (383-384).
• A rentier state is an economy that depends primarily upon external rents, to distinguish these states from a wide variety of other countries that have some forms of rent or have certain rentier classes. In the rentier state, the main economic activity is the collection of rents from foreigners by the state and the distribution of this income among the population (384-385).
• Rentier states behave differently because they are not disciplined by the relationship between work and reward. Instead, they are essentially guaranteed income regardless of behavior or policy. This attitude is reflected in the politics of the oil states of the Arab world (385-386).
• Arab oil states are dependent on oil exports for around 90% of their budgets, while oil makes up 95% of their exports and accounts for between 60% and 80% of their GDP. The oil sector, however, still only makes up around 2% or 3% of the labor force (386).
• In these oil rentier states, the government controls the majority of the rents from oil production and distributes them among the population. In this situation, different relationships to the government, often reflected in different levels of citizenship, result in different access to those oil rents (386).
• There are essentially no taxes among the oil states, as the government can operate solely on oil rents. This has stunted democracy by removing one of the core grievances that generated initial democratic movements: no taxation without representation (387).
• Most oil states provide a very high quality of public services to their citizens, often because they spend lavishly. However, there is still no accountability involved. Citizens do not pay for these services and so they are often seen as royal patronage, and thus requiring loyalty (387).
• The direct connection between the royal families and the running of important government services means that personal financial interests are much more accepted in these countries than they would be elsewhere, meaning that ministers often run large private enterprises with clear conflicts of interest with their government portfolios (387-388).
• Almost all citizens are employed by the government, at levels only exceeded in socialist states. The productivity of these civil servants is generally very low and most do very little and hang out until they receive their paychecks (388).
• Most of the productive economic work in oil state is not done by citizens, but by foreign expatriates. These expatriate laborers usually receive good wages, but lack basic political rights or guarantees of safety from the state (391). 
• Under Sheikh Abdullah al-Salim during the 1950s, Kuwait began to use land sales and gifts as a tool for dispensing patronage indirectly to connected citizens by giving them land and later buying it at heavily inflated prices. This trick was soon adopted by other Gulf states, and the Saudis augmented it by also giving favoured families or politicians portions of the income from the Hajj (387, 389).
• The Kuwaiti real estate and stock market, as well as these markets in other oil states, are heavily speculative and constitute additional payouts by the state to participants. It is common practice to purchase land or shares in post-dated checks, as in through IOUs to be redeemed at a later date, presumably with the money one has earned on current speculative investments (389-390).
• Oil states tend to take advantage of their oil wealth to impose additional rents upon foreign companies during the import of goods. Many oil states force foreign exporters to work through local agents, essentially paying rents to that local company for the privilege of accessing that national market (388).
• The oil wealth of some Arab state has had a wider regional effect, with the entire Arab world gaining new-found strategic importance due to oil reserves. The knock-on effect of oil resources is shown by the attention lavished on poor and marginal states, like Somalia or the Yemens by the USA and USSR (391-392).
• This knock-on effect of Arab oil was also a direct result of the foreign policies of the oil states, which often redistributed their oil revenues to allies as aid. This oil money has been a powerful foreign policy tool, as its withdrawal was used to punish Egypt after the 1978 Camp David Accords and to reward Iraq and Syria for their strong anti-Israel policies (392).
• Remittances play a huge role in the economies of non-oil Arab states, with many of their workers reaping large incomes in the oil states are sending them home. The most significant of these in North Yemen, for whom 85% of its GDP depends on remittances (392).
• There are also a number of Arab states that exist as semi-rentier states. These states have some productive areas of the economy, but also depend on rents or foreign income for large portions of the GDP. For Egypt, around 45% of its GDP comes in the form of either workers remittances or rents from oil and ownership of the Suez canal (392-393).
• Semi-rentier states experience many effects similar to full rentier states. State control of rents still subverts accountability and allows for lavish patronage. This is seen especially through expenditure on the state bureaucracy, which imposes a heavy financial burden while actively harming economic productivity (393).