Abstract
This paper brings together the notions of 'demand-led innovation' and 'related variety' to suggest a new economic diversification policy model, namely demand-led related diversification. The paper argues that economic diversification efforts in the Gulf Cooperation Council (GCC) region have focused predominantly on creating new industries from scratch as opposed to building on existing capabilities. Using insights from the field of innovation studies in general, and demand-led innovation in particular, the paper suggests that the large construction industry in the GCC region has a strong potential to become a main vehicle for economic diversification and industrial renewal in the region, provided that the governments adopt integrated supply-side and demand-led green building strategies.