The pace of change in the Arabian Gulf is extraordinary, but while the smaller states are streaking ahead with modernisation, liberalisation and opening up to the outside world, their larger neighbours are lagging behind. BBC Arab Affairs Analyst Magdi Abdelhadi explores the changing face of the Gulf

In marked contrast to other Arab countries, modernisation, economic liberalisation and social development are happening at a phenomenal rate in the smaller Gulf states. Why are they so much more dynamic and open than their neighbours? What is it about their politics, economies, culture and leaders that has encouraged this rapid change? With these questions in mind I began a tour of the Gulf and the Middle East.

Fifty years ago, Dubai and Qatar were virtually unknown outside the Arab world. Traditional centres of power and culture, such as Cairo, Damascus and Beirut, looked down on the Gulf region as backward and deeply conservative. They can't do that any more. The discovery of oil and decades of massive investment in education and infrastructure are bearing fruit; the periphery is threatening to upstage the traditional urban centres of the Arab world.

Dubai has a building programme as ambitious as China's. To the north, tiny Qatar (roughly the size of Crete) appears determined to become a a country that makes a difference to the region and the entire world. Multi-billion investments in mega-projects like Education City, aim to make Qatar a modern seat of learning and research.

While autocratic rulers in Egypt, Syria and Saudi Arabia are dragging their feet over growing demands for reform, Gulf leaders are pushing ahead

Oman, once synonymous with under-development, has succeeded in modernising without losing its soul. And, while autocratic rulers in Egypt, Syria and Saudi Arabia are dragging their feet over growing demands for reform, Gulf leaders are pushing ahead.

Oil wealth has been essential to the development of a super-modern infrastructure and the welfare state. But equally important is the role of leadership and vision. An influx of Western expertise, and educated Arabs fleeing repression and stagnant economies, are slowly transforming the Gulf into a 'new Arab world'.

It is not only size that attracts Arabs to Dubai. Dr Moustapha Al-Aani, an Iraqi-British academic who works for a new think-tank based in Dubai, moved to the Gulf after 36 years in Britain. For him, Dubai combines the material comfort of the West with being at the heart of the Arab world, something that no other city can offer. He likes Dubai, he says, because the government does not poke its nose into people's lives the way it does in most Arab states.

"Change begins at the periphery," says Dr Amwar Mohammed Gargash, Minister of State for National Council Affairs. Western-educated Gargash represents an emerging meritocracy that is playing a crucial role in implementing the vision of Sheikh Mohammad Rashid, the energetic ruler of Dubai whose outlook and dynamism is widely believed to be behind its spectacular transformation. When I ask what Dubai can teach the bigger centres, he says: "The Dubai model cannot be photocopied." But, he adds, other Arab states can learn from the underlying principles. "You keep government quite small, you pay your people well. You create a culture where government is a mere enabler, it does not become a stumbling block, but a building block."

Few doubt that the oil-rich countries of the Gulf will continue to accumulate wealth. But whether emirates like Dubai will be the tugboat that will ultimately tow the big ship of the Arab world out of its economic underdevelopment and potentially explosive political instability is hard to say.

The New Arab World - Dubai
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The New Arab World - Oman
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The New Arab World - Qatar
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Magdi Abdelhadi has been with BBC World Service since 1994. He has reported widely from the Arab world, and presented many documentaries on the region.