The Foreign Direct Investment and Trade Connection Between China and the Gulf Cooperation Council Countries

PurposeThe present paper seeks to investigate the impact of International Financial Reporting Standards (IFRS) adoption on the foreign direct investment (FDI) in the Gulf Cooperation Council (GCC) region for the period 1980–2017. This study relies on the information asymmetry theory, according to which IFRS adoption, as a positive signal for investors, should attract more FDI. This research is crucial and presents an interesting framework for providing a major motivation for empirical insights since the macroeconomic evidence on the impact of IFRS adoption on FDI is still unclear in the GCC region and no empirical evidence has been provided in the existing related literature.Design/methodology/approachThe analysis was conducted based on panel data from GCC countries over the period 1980–2017 and using the autoregressive distributed lag (ARDL) modeling approach and the pooled mean group (PMG) estimation method.FindingsThe findings indicate that the decision of adopting IFRS in GCC countries has a positive impact of 3% on FDI inflows in the short run. However, the adoption of IFRS in the region leads to a decrease of 10.4 % in FDI inflows in the long run.Practical implicationsThese findings should be of a major interest to regulators and policymakers in GCC countries, practitioners and academic researchers, international investors, managers and any other interested groups about the accounting environment in GCC countries and other developing countries having an interest in the economic consequences of IFRS adoption, as a driver of FDI, in developing countries.Originality/valueThis investigation provides original empirical evidence on the effect of IFRS adoption on FDI inflows within the context of the GCC area. In fact, the current international literature is lacking empirical evidence on the effect of IFRS adoption on FDI inflows for the GCC countries as a whole. Furthermore, this study offers an original methodological contribution to the macroeconomic impact of IFRS adoption literature by using the PMG estimator since there has been no research works to date that has used this method of estimation.

In general, foreign direct investments (FDIs) play a crucial role in driving a country's economic development, promoting diversification, and enhancing competitiveness. The Gulf Cooperation Council (GCC) countries, which heavily rely on the oil and gas sectors, are particularly vulnerable to fluctuations in commodity prices. However, these countries have recognized the imperative of economic diversification and have increasingly turned to inward FDIs to achieve it. By attracting capital, advanced technology, and expertise from foreign investors, FDIs enable the GCC countries to expand their economic base beyond the oil and gas sectors. This diversification not only creates employment opportunities but also fosters resilient economic growth, ultimately leading to an improvement in the living standards of the local population. This study investigates the macroeconomic and environmental factors that potentially attract foreign direct investment (FDI) inflows into the Gulf Cooperation Council (GCC) countries in the long run. Additionally, the study explores the causal relationship between these factors and FDI inflows. The panel autoregressive distributed lag (ARDL) approach to co-integration is the primary analytical technique used, utilizing long time-series data from six GCC countries, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) during the period 1990-2019. The empirical results indicate that, in the long run, almost all independent variables significantly influence FDI in GCC countries. Variables such as GDP growth (GDPG), inflation (INFL), carbon dioxide emissions (CO2), and urbanization (URB) are found to be highly significant (p≤0.01) in their impact on FDI. Moreover, unemployment (UNEMP) also positively and significantly influences FDI in these countries in the long run. Based on the key findings, strategies aimed at reducing persistently high unemployment rates, maintaining population growth, viewing FDI as a driver for GDP growth, and continuing with infrastructure development and urbanization are expected to attract more FDI inflows into GCC countries in the long run. Additionally, fostering both long-term economic incentives and creating a conducive business infrastructure for investors are vital for attracting inward FDI into any nation, including those in the GCC. This research would benefit various stakeholders, including governments, local businesses, investors, academia, and the local society, by providing valuable knowledge and informing decision-making processes related to economic development, diversification, and investment promotion.

Korean Abstract: 본 연구는 최근 국제유가 하락에 따라 한ㆍ중동 경제협력이 위축될 것이라는 우려가 있지만, 유가 하락이 중동 산유국에는 오히려 경제 체질을 개선할 수 있는 기회가 될 수 있고, 우리는 이러한 기회요인을 적극적으로 활용하여 향후 한ㆍ중동 동반성장을 위한 지속적인 경협관계를 만들어나가야 한다는 점을 제시한다는 데 의의가 있다. English Abstract: The aim of the research is to suggest economic cooperation framework between Korea and the Middle East in the times of lower oil prices. A rapid decline of oil prices since the second half of 2014 has negatively impacted on economy of the GCC(Gulf Cooperation Council) countries which heavily depend on oil and gas sector. GCC countries are facing economic recession with the worsening of the financial situation, lack of liquidity and decrease of investment. The sharp drop in oil revenues due to lower oil prices caused government fiscal distress and made the GCC countries use accumulated foreign exchange reserves and sovereign wealth fund. They also prioritize projects focusing on social infrastructure including education and public services, leading to decrease of number of project contracts awarded in the GCC region. In response to the economic slowdown and fiscal burden, GCC countries have strengthened policy measures for economic diversification. They have promoted various supporting policies to nurture their strategic industries - most notably the renewable energy sector - and competitive small and medium-sized enterprises in the region. In order to regain fiscal soundness, GCC countries have been trying to cut their energy subsidies and revise the tax system, expanding government loans and privatization of their state-owned companies than the past. Moreover, they are making more efforts to increase foreign direct investment inflows with improvement of business environment and PPP(Public-Private Partnership) procedures. The economic difficulties facing the GCC countries due to lower oil prices is causing a significant concern over dwindling economic cooperation between Korea and the GCC countries. In response to this, a new cooperation framework is needed to strengthen bilateral ties for shared growth. Four fields of cooperation can be identified as follows. First, industrial cooperation should be reinforced to expand economic diversification and job creation in the GCC countries. Second, energy cooperation should be broadened into the fields of renewable energy development and energy efficiency technology other than energy trade. Third, investment cooperation need to be strengthened to facilitate joint investment in the region including joint ventures. Fourth, institutional cooperation between governments is needed to share Korean institutional reforms in the fields of tax, subsidy, privatization, FDI and so on, deepening mutual understanding of economic partners for co-development.

This study examines the impact of the financial leverage on the Islamic banks’ performance in the GCC countries during the period from 2005-2017. The population of this study included the Islamic banks in the GCC countries. Thirteen years data of 25 listed Islamic banks in the GCC countries were used, wereby these data were retrieved from the Thomson Reuters DataStream. This study utilized the fixed effect regression model. The findings show that the financial leverage a has significant impact on the performance of the Islamic banks’ performance in the GCC region. More specifically, the financial leverage has a positive and significant impact on ROA, ROE, and Tobin’s Q of the Islamic banks in the GCC countries, thus indicating that the higher is the financial leverage the higher is the performance of the Islamic banks in the GCC region. However, the results of this study do not provide evidence to support the Agency Cost Theory that implies a decrease in the performance when equity ratio is increased. On the other hand, the findings provide evidence to support the Signaling Theory that argues that banks are expected to have a better performance credibly in transmitting this information through the higher capital. The findings imply that the level of financial leverage committed by the Islamic banks depends on their flexibility in adjusting their debt value and earning power.

Interpreting mortality trends in the GCC countries: The healthy migrant effect

This study seeks to explore the initiatives of the Gulf Cooperation Council (GCC) countries to launch smart cities through developing a framework of smart cities consisting of five pillars namely: infrastructure, health and primary education, technological readiness, innovation and finally, macroeconomic environment. These five pillars are measured using data collected from the Global Competitiveness Report over ten years from 2009 to 2018. Concerning the first pillar, the infrastructure pillar, the results show that the GCC countries achieved a global advanced rank among 138 countries although there is a relative stability in the trend of the rank of the GCC countries during the study period from 2009 to 2018. However, the results reveal that there is an improvement in the rank of the GCC countries in two more pillars which are macroeconomic environment and health and primary education during the study period. Concerning technological readiness and innovation pillars, the GCC countries achieved significant improvement and progress in the trend of their global rank among 138 countries in the world. Furthermore, there is a rapid increase in the GCC countries in adopting modern technology. Finally, it can be argued that the GCC countries have initiatives and basic foundations to launch smart cities.

Energy consumption accounts for most of global anthropogenic greenhouse gas emissions. Managing the growth in energy demand is therefore a key part of climate change mitigation. In the Gulf Cooperation Council (GCC) countries, energy consumption has been growing rapidly. Between 2004 and 2014, final energy consumption grew at an average annual rate of 6.8% compared to a global average of 1.8%. Energy efficiency can help GCC countries manage their energy demand growth, but it is difficult to measure energy efficiency, so analysts often rely on indirect indicators such as energy intensity. Frontier analysis can be used to measure energy efficiency, but is data intensive. To undertake frontier analysis for the GCC countries it was therefore necessary to construct a new dataset, which was used for corrected ordinary least squares to estimate underlying energy efficiency between 2004 and 2014 for two key sectors in the GCC countries: residential electricity and road transport gasoline. The results suggest that underlying energy efficiency generally improved in the GCC region, in contrast to the trend of rising energy intensity that the region has been witnessing. The energy efficiency improvements may have been driven by global technical progress and tighter global fuel economy standards, of which the GCC countries were beneficiaries. With the provision of high quality, recent data with shorter lag times, frontier analysis could be used to provide prompt feedback on the impact of energy efficiency policies and programmes, leading to better outcomes.

PurposeThe purpose of this paper is to explore the intellectual capital (IC) performance of banks in Gulf Cooperation Council (GCC) countries and to empirically investigate if IC has an impact on financial performance as well as to identify the IC components that may be the drivers of the traditional indicators of bank success.Design/methodology/approachThe empirical data are drawn from banks’ annual reports over the three-year period of 2008 to 2010. Ordinary least squares regression analysis is constructed to examine the relationships between IC and the banks’ financial performance indicators. Pulic’s value-added intellectual coefficient method (VAIC) is applied to measure IC performance.FindingsEmpirical findings, after controlling for bank size and global financial crisis, indicate that IC is positively associated with bank financial performance indicators in all GCC countries. However, when VAIC is split into its three components, the relationships between these components and bank financial performance indicators are varied.Research limitations/implicationsThe main limitation of this study is the use of IC measurement model. Its basic advantage (simplicity and ease of use) is also its main limitation. The main problem is measuring the contribution of something which is not physical and cannot be easily quantified. The key issue is that the value created by IC is indirect. However, at present, no perfect solution is available for intellectual capital measurement, as the area is still exploring the best possible solutions.Practical implicationsThe results may extend the understanding of the role of IC in banking sector in GCC region and may give inputs to managers of GCC banks to structure relevant strategies to obtain, utilize, develop and retain IC. The findings also could help policy makers in GCC to formulate and implement policies for establishing a resilient banking sector.Originality/valueThis study adds to the literature by extending the knowledge of IC performance and its utilization for increasing the financial performance of GCC banks. There has only been one previous empirical study that explores the IC and its relationship with the traditional measures of bank performance in GCC region (only in Bahrain). It is the first comparative study across GCC countries.

In view of the economic integration process taking place with considerable speed in the six oil-rich Gulf Co-operation Council (GCC) countries, the question of attracting foreign direct investment (FDI) has come into sharper focus. In fact, policymakers in some of these countries consider FDI inflows as an index of the success of their international business regimes. This paper examines and analyses the evidence pertaining to FDI in the GCC region. It is argued that the process of economic co operation and integration leading to the formation of a customs union in 2003 in the GCC countries has the potential to enhance the attractiveness of these nations for FDI inflows. Based on a survey exercise, the paper goes on to identify the perceived regiocentric determinants of FDI in the context of economic integration in the GCC region. While most of the determinants identified in the paper are in line with conventional wisdom, it is argued that their hierarchical importance is context-specific.

Foreign direct investment (FDI) inflows, good governance, and oil rents have the potential to accelerate stock market trade (SMT) in the oil-dependent economies of the Gulf Cooperation Council (GCC). Besides, spatial linkages are anticipated in these markets due to their geographical and economic interdependence. Therefore, this research aims to estimate the spatial effects of FDI, oil rents, gross domestic product (GDP) per capita, and political stability on SMT in the GCC region. Using spatial econometric analysis, this study investigates a panel of six GCC countries from 2001 to 2020. Unlike previous research, this study contributes to the GCC literature by capturing both local and cross-border spatial effects of FDI, political stability, GDP per capita, and oil rents on SMT in the interlinked GCC stock markets. The results reveal that while oil rents increase SMT in local markets, they reduce SMT in neighboring markets through spillover effects. However, the total net effect of oil rents on SMT is positive. Thus, oil rents support SMT across the entire GCC region. GDP per capita has a positive effect on SMT in local economies. Additionally, FDI and political stability exert positive effects on SMT in both local and neighboring markets, generating positive spillover effects that benefit the entire GCC market. These findings suggest that attracting FDI to promote SMT and enhancing political stability in the region would further support the growth of SMT in the GCC region.

In the GCC countries, date-palm sector is strategically important for the economic, social and environmental development. Therefore, markets globalization has had a huge impact on the comparative advantages of date exports from the GCC countries, highlighting a new range of necessary determinants for competitiveness of these countries on the international date palm date market. The current study is conducted in the framework of the “Development of sustainable date palm production systems in the GCC countries of the Arabian Peninsula” project funded by the Gulf Cooperation Council (GCC) and led by the International Center for Agricultural Research in the Dry Areas (ICARDA), and aims to provide updated estimates of competitiveness indicators of the GCC countries on the international market of date palm.The study starts by a summary description of updated figures concerning date’s production, yields, and consumption trends of the different GCC countries. This first part of the research paper also includes a presentation of the date trade matrix (destinations of exports and imports) of the considered countries. In a second part of this section, a set of competitiveness indicators were calculated to better reflect on the date trade balances performances of each of the GCC countries. The measures of competitiveness indicators conducted in this paper include: i) the Market Share (MS); ii) the Revealed Comparative Advantage (RCA); and iii) the Trade Balance Index (TBI). The Market share indicator was used to identify size advantages and the degree of specialization of a given country on the international market of a given commodity. The RCA has been defined as a measure of performance of international trade competitiveness of a given country for a given commodity. The TBI is used to analyze whether a country has specialization in export (as net-exporter) or in import (as net-importer) for a specific group of products. Data from both FAOSTAT and UN COMTRADE sources was used for the calculation of these indicators. Empirical findings show that GCC and North African countries are holding more than 70% of the international market of dates. The sum of market shares of the 6 GCC countries was about 30% of the international date market during 2015. This is showing that these countries together have strong potential for dominating the international date market. In terms of growth, it was clear that all GCC countries, including the least present on the international market are progressing quite positively with increasing shares from one year to another. In terms of RCA, the highest RCA value was recorded for Saudi Arabia (KSA). It was for about 43.5 in 2013, indicating that the country date export share for 2013 is 43.5% higher than its share in total world export of agricultural goods. Finally, TBI results show the existence of structural differences between KSA and UAE in terms of dates export and import patterns. These two countries are both the main players in date export in the GCC area. However, even though UAE is a net exporter of date palm, which its TBI is much lower than the TBI of KSA, showing that UAE is also importing a higher proportion of its exported dates compared to KSA. The date trade patterns among the GCC countries shows that there is a wide scope of coordination between the different trade strategies of these countries, through specialization and division of tasks. This can generate important opportunities for gaining more weight on the world market of dates.

The economic crisis and decline in oil prices caused by the pandemic led governments in the Gulf Cooperation Council (GCC) region to step up their diversification efforts. Prior to the COVID-19 pandemic, the Gulf Cooperation Council (GCC) countries were already striving to diversify their economies away from dependence on hydrocarbons, with varying degrees of success. Their development plans and visions aim to shift their economies away from oil and gas toward knowledge-based post-oil economies with solid and sustainable foundations. Accordingly, this paper has three goals. Firstly, it aims to present the GCC’s socio-economic features and highlight the importance and relevance of economic diversification. Secondly, it seeks to analyze the impact of the COVID-19 pandemic on GCC economies and evaluate how the pandemic spurred diversification initiatives. Thirdly, the paper aims to analyze the present state of the knowledge-based economy in the GCC region, including its strengths, drawbacks, and prospects for the future. The methodology of the paper is based on a semi-systematic literature review that includes academic and gray literature. The findings highlight that throughout the previous several decades, continuous efforts to develop the status of ICT, education, innovation, and entrepreneurship in several GCC countries have contributed to improving their international competitiveness, as seen by advancements in rankings issued by various international organizations. Furthermore, political stability, significant financial resources, and a stable credit rating provide these countries with solid foundations for future sustainable development. However, several functional, structural, and cultural factors challenge the diversification process and the shift toward a knowledge-based economy.

The prospective cohort Dialysis Outcomes and Practice Patterns Study (DOPPS) initiated data collection in national samples of hemodialysis (HD) units (total of 41 study sites) in all six Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) in late 2012. Here, we report initial results regarding mineral bone disorders (MBDs) and its management in the GCC countries. Forty-one randomly selected HD facilities, treating >23 HD patients each, were sampled and represent care for >95% of GCC HD patients. Descriptive results for the GCC countries based on a random sample of 20-30 HD patients in each study facility. Initial results for the GCC are from 931 HD patients treated at 41 dialysis units (ranging from 1 unit in Bahrain to 21 in Saudi Arabia). Results are presented as weighted estimates, accounting for the sampling fraction in each unit. Baseline descriptive statistics (e.g., mean, median, or percentage), weighted by facility sampling fraction were calculated for the study sample. For analyses examining the percent of facility patients having (a) serum phosphorus >6.0 mg/dL or (b) parathyroid hormone (PTH) >600 pg/mL, analyses were restricted to facilities having at least 10 HD patients with a reported serum phosphorus or PTH measurement, respectively. Logistic regression analyses of the indicated binary outcomes were based on the use of generalized estimating equations and were adjusted for GCC country, patient age category (<45 years, 45-65 years, and >65 years old), sex, and whether the patient was diagnosed with diabetes mellitus. Logistic models accounted for clustering of patients within facilities, assuming an exchangeable working correlation matrix. Mean age of HD patients in the GCC countries was 53 years vs. 61-64 years in the three other DOPPS regions. MBD markers showed slightly lower mean serum Calcium in the GCC countries, similar mean serum phosphorus, and intermediate median PTH levels compared with the three other DOPPS regions. Among GCC countries, the country mean value of MBD markers ranged from 8.6-9.0 mg/dL for serum calcium, 4.4-5.4 mg/dL for serum phosphorus, whereas median PTH ranged from 163-389 pg/mL. Similar to other DOPPS regions, PTH was higher among patients who were younger or without diabetes, and serum phosphorus was lower with older age (P <0.001 for each). History of parathyroidectomy was lower in the GCC countries versus other regions but did not differ when adjusted for age and dialysis vintage. Among treatments used for managing MBD, the GCC countries showed one of the highest uses of cinacalcet (24%) and phosphorus binder use (81%), whereas intravenous Vitamin D use (24%) was slightly higher than that in EURANZ. A much larger fraction of HD patients in the GCC countries had a dialysate calcium bath ≥3.5 mEq/L (43%) versus 0-4% in the three other DOPPS regions. Although many aspects of MBD management and MBD marker achievement are similar in the GCC countries to that seen in other DOPPS study regions, large variability was seen across countries and facilities in the GCC. Mean serum calcium was lower in the GCC despite the much greater use of dialysate Ca of ~3.5 mEq/L which may be due to the relatively low use of vitamin D and higher cinacalcet use, meriting further study. Future work will focus on GCC facility HD practices and patient characteristics most strongly related to the achievement of MBD target levels and associated outcomes.

Hydrogen economy for sustainable development in GCC countries: A SWOT analysis considering current situation, challenges, and prospects

Sickle Cell Health Awareness, Perspectives, and Experiences (SHAPE) Survey: Findings on the Burden of Sickle Cell Disease and Impact on the Quality of Life of Patients and Caregivers in Gulf Cooperation Council Countries