“Just one word: plastics.” That was the stodgy career advice given to Dustin Hoffman in a famous scene from 1967’s “The Graduate.” Four decades on, Gulf states appear to be heeding it. A slew of new plants in the region will soon begin churning out decidedly unsexy petrochemicals like methylene, melamine, polyethylene, and even urea-based chemical fertilizers.

State-owned firms are also expanding internationally at a time when a severe drop in global demand has put some of the world’s biggest chemical concerns in survival mode. Worrying as such aggressive moves may seem at a time like this, economists and chemical industry specialists say Gulf investors are playing it smart, as long as they remain careful not to over-invest.

Expect to hear more about petrochemicals in the years to come. Now that the Dubai property bubble has burst, countries in the region are likely to shy away from hubristic real estate plays and refocus their attention on less glitzy sectors like industrial manufacturing and trade. So-called downstream industries like petrochemicals, which capitalize on the competitive advantage of cheap and close hydrocarbon inputs, are likely take a leading role in diversifying local eco-nomies away from dependence on oil and gas exports. The recent $2.3 billion purchase of Canada’s Nova Chemicals by Abu Dhabi’s government-owned International Petroleum Investment Co. (IPIC) signals that cash-rich Gulf states may even act as white knights to save embattled chemical-makers hit hard by the global recession.

The Gulf boasts a growing list of petrochemical ventures. An affiliate of Saudi Basic Industries Corp. (SABIC), one of the largest enterprises in the Gulf, is currently building the Saudi Kayan complex in Jubail, billed as the world’s largest integrated petrochemical facility, at an estimated cost of at least $8 billion. Abu Dhabi is said to be pouring close to $5 billion into its new Borouge facility in Ruwais, which will boast a capacity of nearly 1.4 million tons per year when it comes on stream next year. Overall, new projects with a total capacity of more than 7.5 million tons per year are in the pipeline, likely to push the region’s share of global polyethylene capacity beyond 20 percent, according to Middle East Economic Digest.

Abu Dhabi is also forging ahead with Abu Dhabi Polymers Park, a plastics conversion cluster the emirate hopes will attract 70 firms producing 170 million tons of plastic products by 2012. The cluster is a project of Abu Dhabi Basic Industries Corporation (ADBIC), which was launched in 2006. As the name  suggests, it’s the UAE’s answer to Saudi-based SABIC, one of the world’s leading producers of ethylene glycol, polyethylene, polyolefins and polypropylene.

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