Challenges of Economic Diversification in the GCC Countries

Author(s):  
Ashraf Mishrif

Significance Oman has historically maintained strong business and diplomatic links with Iran, cutting across the anti-Iranian political agenda pressed by Saudi Arabia on the other Gulf Cooperation Council (GCC) countries. Economic relations are now more important for Muscat than Tehran, while the political ties are most useful for Iranian foreign policy. However, Oman in January 2017 joined the Saudi-led Islamic Military Alliance to Fight Terrorism, comprising 40 countries excluding Iran and Iraq. Impacts Oman’s urgent need for economic diversification will broaden its search for economic partners. If the Iran-Saudi Arabia regional confrontation worsens, Oman’s midway stance could be tilted by financial benefits from either side. In case of a serious Washington-Tehran showdown, Muscat would maintain quiet links with Iran, but ultimately prioritise US relations.


Significance This brings in different perspectives on issues such as economic diversification, social liberalism, Israel and the role of the Gulf Cooperation Council (GCC). Impacts Longstanding fears of family splits over the succession could persist in Kuwait and potentially Saudi Arabia. The GCC will become even less significant, lacking any economic, infrastructural or security role. Large-scale ‘giga-projects’ raise concerns that vanity is outweighing viability. The prospect of receding support from GCC countries could undermine entrenched elites in both the West Bank and Beirut. The upcoming ‘energy transition’ will face the current line-up of rulers with a unprecedented economic crisis in the coming years.


2018 ◽  
Vol 5 (5) ◽  
pp. 67
Author(s):  
Ashraf Nakibullah

Countries, such as the GCC countries, that predominantly rely for their income on oil resources face the reality that these sources of their income would not last forever. Thus, being a member of the GCC countries, Bahrain has been pursuing the policies of sustainable and diversified economic growth. This paper uses the share of nonoil real GDP to total real GDP as a measure of diversification to access the extent of diversification in Bahrain. The shares of nonoil GDP increased from 64% in the beginning of this of this century to 80% in 2016 with an average annual growth rate of 6.2% for the period 2002-2016. This success story seems to have an inherent problem. A bivariate structural VAR model  with nonoil real GDP and oil price shows that oil prices (indirectly oil sector) have positive impact on the movements of the nonoil real GDP. This means nonoil sector has been very much dependent on the oil sector and neutralizing the dependence is required for the post oil era. 


2017 ◽  
Vol 118 (5/6) ◽  
pp. 214-234 ◽  
Author(s):  
Stuti Saxena

Purpose As the ongoing oil prices’ crisis is emerging as a major cause of concern for the Gulf Cooperation Council (GCC) region, the constituent governments are attempting at undertaking measures of economic diversification to attain long-term sustainability. The author posits that open government data (OGD) has a significant role to play in facilitating the economic turnaround of the GCC region, given that OGD promotes innovation and economic growth besides providing avenues for collaboration and participation among different stakeholders. Design/methodology/approach Following a structured literature review, the paper scans literature on OGD followed by providing a typology of countries on the basis of their OGD-adherence (“laggard”, “caged”, “forerunner” and “champ”). This is followed by a discussion on the ongoing oil prices’ crisis, and evidentiary support is lent by examples from the OGD portals of each of the six GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates) to provide indicators as to how a robust OGD implementation may support their economic diversification objectives. Findings Although the present OGD framework of the GCC is relatively weak, it is asserted that OGD has immense potential in facilitating the economic diversification initiatives of the GCC countries. Therefore, the GCC needs to strategize upon institutionalization of their OGD initiatives for realizing their “vision” and goals of economic diversification to result in an economic turnaround effectively. Originality/value Besides providing a typology of countries as OGD-adherents and categorizing GCC as “forerunner(s)” on the basis of the typology, the originality of the study lies in its attempt to answer the research question: “what is the role of the OGD in facilitating the economic diversification of the GCC?” Conceding that the research on OGD in the GCC context is few and far between, the present study is a significant contribution to the extant literature pertaining to the roll-out of OGD in developing countries.


foresight ◽  
2018 ◽  
Vol 20 (3) ◽  
pp. 237-251 ◽  
Author(s):  
Stuti Saxena ◽  
Tariq Ali Said Mansour Al-Tamimi

Purpose The study aims to underscore the initiatives taken by the Gulf Cooperation Council (GCC) countries in spearheading their drive towards creating “smart” cities. Design/methodology/approach The study uses a qualitative approach by invoking documentary analysis supplemented by responses provided by 13 interviewees from public and private sector. Findings All the six GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates) are keen on building upon their infrastructure to push their “smart city” agenda which would go a long way in furthering the economic diversification objective of their region besides improving the quality of public services. Originality/value Hitherto, research has been focused on appreciating the “smart city” initiatives of developed countries; this study seeks to build upon the literature on “smart cities” by contextualizing the research setting in the developing countries. Second, the study shows that with the ongoing oil prices crisis in the GCC, the “smart city” initiatives of the countries are conceived as possible avenues of economic diversification and competitiveness.


2021 ◽  
Vol 13 (13) ◽  
pp. 7240
Author(s):  
Waqar Ameer ◽  
Helian Xu ◽  
Kazi Sohag ◽  
Syed Hasanat Shah

Recently, the Gulf Cooperation Council (GCC) member countries increased their foreign investment outflows (OFDI), underpinning domestic investment (DCF) and diversifying their economies to reduce the reliance on hydrocarbon economies and augmenting green investments. Thus, our research study examines the effects of OFDI on aggregate capital formation and the decomposing effects of capital formation in to private as well as public investment by applying the common correlation effects (CS-ARDL) panel data methodology in the GCC countries. Our empirical result findings show that OFDI do not significantly spur domestic investment in the GCC countries. However, our disaggregated analysis shows that OFDI significantly contributes to private capital formation only while its contribution to public capital formation remains inconclusive. The extensive public involvement in the economies causes a crowding-out effect, eventually impedes the economic diversification, competitiveness and green activities. Our empirical evidence provides a few policy implications.


2020 ◽  
Vol 9 (4) ◽  
pp. 334-341
Author(s):  
Osama D. Sweidan

We investigate the Granger non-causality relationship between oil prices and the economic diversification process in the GCC countries during the period 1989-2017. This paper uses Pedroni's (2004) panel cointegration tests and the panel non-causality test of Dumitrescu-Hurlin (2012) to achieve its goals. We find that oil price changes Granger cause the movements in the diversification progression. It indicates that economic diversification of the GCC countries is not a priority to the GCC governments because their role is changing. As a result, the GCC countries should give priority to the economic diversification if it is a strategic plan for their economies.


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