White Elephant Projects: The Economic Concept and Leading Examples in the Gulf

What Are White Elephant Projects?

In economics, "white elephant" projects are those with a negative social return; that is, the costs of building and maintaining them exceed the economic and social benefits they generate. They are costly, poorly utilized, difficult to dispose of once completed, and ultimately represent an ongoing financial burden on whoever built them, whether a government or a private entity.

The term originates historically in Southeast Asia, where white elephants were considered sacred animals in the kingdoms of Thailand and Burma. A king granting one of his subjects a white elephant was both a blessing and a curse at once: a blessing because the animal was sacred, and a curse because its extravagant upkeep produced no practical benefit and could not be disposed of. The term entered Western economic discourse in the nineteenth century and settled into the literature to describe any project that appears valuable on the surface but constitutes an ongoing financial weight.

Academically, Robinson and Torvik (2005), in their reference study "White Elephants," define such a project as any investment with a negative social surplus. The literature distinguishes three types: projects with a purely negative social return (costs exceeding total benefits), financially unsustainable projects (which may be socially worthwhile but strain the public budget), and projects unfair to future generations (burdening the future with costs disproportionate to their current benefits).

Why Do These Projects Arise?

Five recurring causes explain the emergence of white elephant projects across the economic literature. The first is political economy and governance failure: studies show the vast majority of these projects arise when decision-makers find it difficult to make credible promises to their constituents, so they turn to massive, visually dominant infrastructure to deliver tangible benefits, even if social costs exceed returns. The core paradox, as Robinson and Torvik note, is that inefficiency itself is what makes these projects politically attractive.

The second is the sunk cost fallacy: after investing enormous sums, decision-makers face moral and political pressure to continue even once a project's failure becomes clear, to avoid admitting the loss — which prolongs failing projects and deepens their costs. The third is shortcomings in feasibility studies: many bodies rely on excessively optimistic demand forecasts and deliberately understated initial costs (a phenomenon known as strategic misrepresentation), making projects look attractive at the planning stage while the gap with reality is revealed only later.

The fourth is the resource curse in rentier economies: countries rich in natural resources, oil-producing ones especially, are more prone to this phenomenon, because abundant revenue reduces the pressure toward fiscal discipline. The fifth is failures in contracting and incentive mechanisms: the traditional public-project contracting system does not incentivize implementing firms to verify a project's real feasibility, pushing them toward executing low-return projects without adequate information beforehand.

Notable International Examples

White elephant examples around the world share a common trait: a massive initial investment relative to weak actual use, or costs that overran initial projections by orders of magnitude. Notable cases include: the Ryugyong Hotel in North Korea (construction began in 1987 and remains unfinished, a 105-story skyscraper that is not in operation), Montreal–Mirabel Airport in Canada (opened in 1975 as the largest airport by area, closed to passengers in 2004 due to weak demand), China's largest shopping mall (the New South China Mall, operating at a vacancy rate exceeding 90%), Detroit's streetcar system (designed for 65,000 daily riders, actual use never exceeded 6,000), Russky Bridge in Russia (more than $1 billion spent to serve the 2012 APEC summit, connecting an island home to a few hundred families), and Clem Jones Tunnel in Australia (used at less than 50% of projected traffic volume even after toll fees were cut in half).

White Elephant Projects in the Gulf

The GCC states are in the midst of unprecedented developmental transformation, driven by ambitious national visions and abundant oil revenue. Yet the literature cautions that this very wealth increases exposure to investment in projects with weak or negative social returns.

Saudi Arabia — NEOM and "The Line": NEOM is the region's most controversial case. Announced in 2017 with an initial cost estimated at $500 billion, internal estimates had risen by 2025 to between $1 trillion and $8.8 trillion — an overrun exceeding initial projections by more than 17-fold according to some estimates. As of May 2026, the project had undergone drastic scaling-back and went unmentioned in Saudi Arabia's 2026 budget statement. The issues observed include a lack of clear real demand for housing in a linear city 170 km long and 500 m tall in the middle of the desert, the postponement and cancellation of major contracts (March 2026), a failure to attract the hoped-for foreign investment, and documentation of an "institutional fear" that discouraged staff from raising professional concerns early.

Kuwait — Silk City: Announced as Kuwait's big bet on economic diversification, spanning 250 km² with a planned 1,001-meter Mubarak Al-Kabir Tower, the project has remained stalled and periodically halted, described by analysts as a stark example of megaprojects that are announced but never completed.

The UAE: Al Maktoum International Airport (opened in 2010, total cost estimated at $82 billion, described as a "white elephant" due to weak utilization for years despite a $35 billion expansion plan announced in 2024), Masdar City in Abu Dhabi (announced in 2008 as "the world's most sustainable city," but today closer to an unfinished ghost city), and The World Islands in Dubai (construction halted during the 2008 crisis and remained largely dormant for years).

Qatar and Doha: Are There White Elephant Projects?

The precise academic answer here is: yes, and partly no — projects cannot be judged apart from their context. Qatar consciously sought to avoid the white elephant trap through deliberate legacy planning, though some structural concerns remain and merit continued monitoring.

The eight stadiums built or renovated for the 2022 World Cup were subject to intense scrutiny by analysts, given that Qatar — with a population of 2.6 million, of whom only 360,000 are citizens — has a limited domestic football league that does not need this massive capacity. The trap-avoidance measures were clear: Stadium 974 was built from reassemblable shipping containers and fully dismantled after the tournament, capacity at most stadiums was reduced from 40,000 to 20,000 seats, stadiums were repurposed to serve universities and the community under deliberate legacy programs, Qatar pledged to donate 170,000 dismantled seats to developing countries, and the stadiums continued hosting major tournaments such as the Club World Cup, the Gulf Cup, and the Asian Cup.

Still, legitimate questions remain: the long-term use of major stadiums like Lusail (80,000 seats) remains debated, as it is regularly used by only two local teams; and the total cost of World Cup infrastructure exceeding $200 billion includes an important caveat for fair comparison — a large share of it was already planned as part of Qatar National Vision 2030. A study in the Scottish Journal of Political Economy also noted that Gulf states may slide toward white elephant projects when oil prices decline and geopolitical risks rise.

On other diversification projects, economists specializing in the region raise fundamental questions worth monitoring rather than resolving prematurely: do massive real estate developments (Lusail, Msheireb, DW Triangle) genuinely match expected population density, or do they generate a supply surplus? Does the capacity of Hamad International Airport ($28 billion in cost) reflect current and future demand? And how are the priorities of Qatar's five-year public works plan (2025–2029), valued at QAR 81 billion, weighed between actual economic and social impact? It is worth noting that Qatar enjoys a decisive advantage that distinguishes it from other countries: massive financial reserves that allow it to absorb maintenance costs without immediate fiscal pressure, which reduces the direct negative impact of any struggling project on citizens.

How Can the White Elephant Trap Be Avoided?

Drawing on the academic literature and country experiences, a set of institutional and methodological safeguards can reduce the likelihood of falling into this trap. At the feasibility study level: requiring independent, transparent studies from neutral bodies unconnected to the implementing entity, adopting full-lifecycle cost-benefit analysis rather than construction costs alone, and countering strategic misrepresentation by applying an optimism-bias correction to the estimates themselves.

At the level of governance and accountability: subjecting large projects to independent review by specialized oversight bodies such as courts of audit, setting binding performance standards and verifiable indicators throughout the project cycle, and activating a "stop point" principle that obliges decision-makers to conduct periodic objective evaluations and retains the option to halt a project before conditions deteriorate.

At the level of contract design: adopting public-private partnership models with an incentive structure that obliges the private partner to share demand risk, and tying contractor compensation to a project's actual performance rather than mere completion of construction. And at the level of strategic planning: investing in human capital and institutional reform as an alternative to infrastructure projects aimed at media visibility, accounting for actual and projected population density when designing capacity, and learning from regional lessons — what happened with NEOM offers a valuable strategic lesson for any entity planning a similar project.

Conclusion

White elephant projects are not confined to any one country; they are a structural phenomenon that arises when the pressures of power intersect with resource abundance, and when symbolic pressures weaken objective oversight of investment decisions. Gulf states carry structural predisposing factors for this phenomenon: oil abundance, centralized decision-making, and competitive anxieties over international image and standing. Qatar faced this threat with relative awareness, as reflected in the design of Stadium 974 and the post-World Cup stadium legacy plans, though legitimate questions remain around some larger development projects. Saudi Arabia's NEOM, meanwhile, stands as a critically important example of how an ambitious project can turn into a white elephant when symbolic considerations dominate economic ones. Prevention, ultimately, lies in the independence of feasibility studies, rigorous governance, and contract models that place a genuine share of the risk on the private sector.

Core Academic References

Robinson, J. A., & Torvik, R. (2005). White elephants. Journal of Public Economics, 89(2–3), 197–210. Ganuza, J. J., & Gomez-Lobo, A. (2020). The simple economics of white elephants. Journal of Mathematical Economics. Abdel-Latif, H., & El-Gamal, M. (2022). White elephants on quicksand: Low oil prices and high geopolitical risk. Scottish Journal of Political Economy, 69(1). Washington Institute for Near East Policy. (2021). The stalling visions of the Gulf. Gulf International Forum. (2026). Rebalancing ambition: Saudi Arabia's megaproject pivot. Flyvbjerg, B. (2014). What you should know about megaprojects and why: An overview. Project Management Journal.