The Macroeconomics of the Arab States of the Gulf by Raphael A. Espinoza

By Raphael A. Espinoza

The economies of the Arab states of the Gulf have undergone huge alterations within the final decade, spurred by way of excessive oil costs and impressive diversification plans. Large-scale immigration supplied the labour strength whereas capital inflows and fiscal improvement leveraged oil wealth to finance diversification. The cave in in genuine property costs worldwide through the worldwide difficulty slowed development and raised questions about the appropriateness of what has been dubbed the 'GCC model'.

The Gulf Cooperation Council (GCC) nations have to this point controlled to leverage their huge average source wealth to accomplish financial prosperity and finance social advances, and the zone additionally emerged as a big resource of money for the opposite international locations within the heart East. however, the GCC face numerous demanding situations. productiveness development needs to bring up to totally benefit from funding. Jobs needs to be created for the nationals and the growing to be formative years inhabitants. country intervention (which is universal, on condition that oil sales accrue to the govt.) needs to turn into effective and be used to diversify and modernize the financial system. additionally, the hot concern highlighted the significance of financial, financial, and fiscal balance guidelines to regulate macroeconomic cycles. This ebook analyses those matters and combines facts and econometric research with theoretical discussions. It concludes with a dialogue of the significance of the GCC for the broader quarter.

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6. Contributions to TFP (1991–2009), in difference from median non-oilexporting country Note: the median non-OECD country in the sample has a TFP over the period 1990–2008 very close to 0. Source: Sala-i-Martin et al. (2004) database, IMF, and authors’ calculations. Data for inflation and terms of trade was not available for Iraq. Data for trade openness was not available for Albania, Kazakhstan, and Libya. indd 32 10/5/2013 12:33:35 PM The Determinants of Long-Term Growth SIZE OF THE GOVERNMENT The size of the public sector is potentially an important factor in growth performance, and Barro (1991) had already noted that the coefficient on government consumption was negative in growth regressions.

The use of this proxy is justified because for most countries (including for the GCC), capital goods cannot be produced domestically and are imported. 5. The data shows that the GCC countries have invested large amounts in high-tech equipments, especially aircraft (Bahrain, Saudi Arabia, Qatar, and the UAE), communication equipment (Kuwait, the UAE, Saudi Arabia). In contrast, Oman has invested in relatively low-tech capital (motor vehicles). 5, countries were sorted by their TFP growth between 1991 and 2008 and capital goods were sorted by their R&D content, as estimated by Caselli and Wilson (2004).

For this index an economy is considered closed—and the index is set to zero—if it satisfies at least one of the following five criteria: nontariff barriers covering 40 percent or more of trade, average tariff rates of 40 percent or more, a black market exchange rate that is depreciated by over 20 percent relative to the official rate, a socialist economic system, or a state monopoly over major exports. If an economy does not exhibit any of the above traits it is considered open and receives a score of one.

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