Gulf Economies Research Articles

The Resource Curse in the Gulf Region: Charting a Path for Long-term Economic Sustainability

The economies of the Gulf States have been reliant on abundant petroleum resources for over a century. The region has experienced substantial economic success in recent decades, attributed to its competitive advantage as the world's oil empire. This success is especially noteworthy given that oil is a major economic resource in the area. However, a new debate has emerged, focusing on the concept of the resource curse resulting from the overdependence of Gulf economies on the petrol dollar. This reliance jeopardizes the long-term and future economic sustainability of the Gulf Cooperation Council (GCC) states. This piece employs a narrative literature review to illustrate how petroleum has shaped the economic landscape, and also the oil market volatility on the economic landscape of the region. The review emphasizes on the necessity for the region to shift its economic and institutional over-dependence away from the petrol dollar to other sustainable alternative economic domains. The review proposes strategic economic directions to guide the region towards a diversified and sustainable economic portfolio, reflecting significant potential for the economy of the region and its states. Sustainable economic development portfolios such as sustainable agriculture, renewable energy, smart cities, real estate development, sports, banking, tourism, and travel were analyzed.

COVID19 and Gulf Migration

The Covid-19 and the resultant contraction in the Gulf economies affected the migrant workers, their dependents in home countries who depend on remittances from Gulf. It exposes the high degree of vulnerability and enforced the Gulf governments to push economic, and financial reforms to protect and maintain labour market stability which resulted in migrant’s unemployment. The slowdown had negative impact on migrant workers of Construction, aviation and tourism sectors. Decline in income, loss of employment, seeking part-time employment as an alternative financial source to offset their full or partial loss of jobs, non-payment of monthly rents, low level of assistance by embassies and non-eligibility for medical insurance were the problems impacted migrants. The pandemic intensifies the nationalization efforts in gulf region. They began to impose taxation on migrant workers which raised their cost of living. Recent trends in Gulf region indicate a ray of hope and optimistic future for the migrant workers. The GCC has realised the vital role of migrants in the development plans. Labour sending countries have to improve the skills of migrants to meet the changing demands of Gulf labour market.

Role of technology management for carbon neutrality in Gulf economies: the role of social globalization and financial development.

This study is founded on the United Nations' Sustainable Development Goals (SDGs) for 2030, particularly SDGs 8, 11, 12, and 13, among others. Investigating the impact of nonrenewable energy, social globalization, financial development, and ICT on CO2 emissions in the Gulf nations, data from 1992 to 2019 was employed using advanced panel methodologies. Both linear and nonlinear autoregressive distributed lag techniques, along with a panel causality approach, were utilized for a comprehensive analysis. These extensive investigations offer robust insights into the ecological sustainability dynamics within the Gulf nations. The empirical findings highlight that positive (negative) shifts in social globalization, economic growth, ICT, and nonrenewable energy correlate with an increase (decrease) in CO2 emissions, while positive (negative) shifts in financial development contribute to a decrease (increase) in CO2 emissions. These results emphasize the need for a policy framework aligned with the SDGs, advocating an inclusive policy framework tailored for the Gulf nations, aiming to drive progress towards achieving SDGs 7, 8, 9, 13, and 16.

Modeling long-term impacts of the COVID-19 pandemic and oil price declines on Gulf oil economies

The COVID-19 pandemic has been detrimental on hydrocarbon-overdependent Gulf states. The effects of the unprecedented oil price declines and substantial COVID-relief packages on Gulf economies are critical, as they can become enduring and foundational if the energy transitions accelerate to meet the Paris Agreement targets. Thus, this study assesses the impacts of the pandemic on the long-term economic sustainability of Gulf economies, using illustrations from Kuwait using the economy-wide WAFRA Applied General Equilibrium (WAFRAGE) Model applied to Kuwait (WAFRAGE-KWT Model). The simulation results indicate that post-pandemic, the economic resiliency of these states has significantly waned, primarily because the pandemic hit during a state of weakened economic resilience following the 2014 oil price collapse and subsequent government response. Although COVID-relief packages appeared in the form of counter-cyclical fiscal policy, Gulf states are unable to realize this policy's full potential benefits. They are incapable of being truly counter-cyclical under their current economic structure and the consumption-based nature of the COVID-relief packages, which protect oligopolistic firms' profits and reduce production, non-oil exports, and economic efficiency. The eroded fiscal and economic resiliency also threatens Gulf states' ability to weather energy transitions. The implication of the findings is that long-term sustainability requires immediate phased implementation of economic and energy reforms.

Long-term statistical assessment of meteorological indicators and COVID-19 outbreak in hot and arid climate, Bahrain.

The COVID-19 pandemic has significantly impacted the global lifestyle, and the spreading of the virus is unprecedented. This study is aimed at assessing the association between the meteorological indicators such as air temperature (°C), relative humidity (%), wind speed (w/s), solar radiation, and PM2.5 with the COVID-19 infected cases in the hot, arid climate of Bahrain. Kendall and Spearman rank correlation coefficients and quantile on quantile regression were used as main econometric analysis to determine the degree of the relationship between related variables. The dataset analysis was performed from 05 April 2020, to 10 January 2021. The empirical findings indicate that the air temperature, humidity, solar radiation, wind speed indicators, and PM2.5 have a significant association with the COVID-19 newly infected cases. The current study findings allow us to suggest that Bahrain’s relatively successful response to neighboring GULF economies can be attributed to the successful environmental reforms and significant upgrades to the health care facilities. We further report that a long-term empirical analysis between meteorological factors and respiratory illness threats will provide useful policy measures against future outbreaks.

The Indian Diaspora as a Social Movement: The Case of the Gulf Countries

In this study, the Gulf diaspora of India is examined with a social movement perspective. The aim of the study is to analyze how the Gulf diaspora was rebuilt during the Modi period. Arab countries in the Persian Gulf began to develop as a result of huge oil reserves and needed an intense workforce in the 1970s to have a modern state capacity. The required capacity of migrant workers was supplied from India, the Persian Gulf, and the South Asia axis and became one of the largest migration corridors in the world. Migrant workers have both stimulated the Gulf economies and become the backbone of the Indian economy. On the contrary, in the Modi period, with the new diaspora strategy, diaspora identity was rebuilt similar to a social movement. Political process theory and contentious theory have been used in attempts to analyze the rebuilding of diaspora identity. In recent years, social movement theory has also been used frequently in diaspora studies. In this study, a new model is proposed and the change in India's Gulf diaspora is examined in the context of macro, meso, and micro dynamics. In this context, diasporas as a social movement is first discussed theoretically. Subsequently, the emergence, development, and content of the Indian diaspora in the Gulf region is reviewed historically. In another section, how the diaspora was strategically rebuilt in the Modi era is discussed through the proposed model. In conclusion, the damage to diaspora politics caused by the new Covid-19 pandemic and the rising trends are evaluated.

Land grabs reexamined: Gulf Arab agro-commodity chains and spaces of extraction

Research on land grabs has identified the Gulf Arab states as major actors in the acquisition of agricultural land. However the role of these investments in the economies of the Gulf remains underexplored in the scholarly literature. In response, I propose that these projects are part of commodity chains that are articulated to the agribusiness industry in the Gulf states. I argue that they are extractive zones; enclaves created through articulation to the investor states, and disarticulation from their host society. With this considered, the commodity chains that link these projects with the Gulf economies transfer surplus value in the form of labour time, but also biophysical matter such as water, energy, and soil nutrients. This focus on the appropriation of nature allows a better understanding of these schemes and their role in the Gulf’s economic growth. As will be demonstrated, the cycle of exhaustion of water impells the location of these land grabs, and this context connects them with the history of domestic projects. This article uses a framework that integrates theory on the spatial contestations of commodity chains with work on political ecology, and by doing so it contributes to a growing body of work that examines the relationship between networks of commodity production and nature.

Navigating the Future of the Energy Transition in the Middle East Gulf Economies Post COVID-19

Despite the oil price shock and global economic slowdown from COVID-19, hydrocarbons will still be relevant as petrochemicals play a vital role in Arabian gulf economies even when shifting to a low carbon future. Increasing the share of renewable energy generation and electrifying mobility will require governments of the Middle East to develop integrated energy and economic strategies. Preparing for a -post-COVID-19 world should extend beyond the energy transition into thinking towards a ‘Just’ inclusive energy transition framework for the citizens in the region.

OFDI Impact on Private Investment in the Gulf Economies

Gulf Cooperation Council (GCC) countries are highly dependent on hydrocarbons, which puts them at great risk to maintain stability in the long run. GCC countries need private investment to reduce their reliance on state and diversify their economies apart from hydrocarbon. The role of private investment is crucial to economic stability and development. Literature suggests that outward foreign direct investment (OFDI) can play a vital role in promoting private investment. Therefore, using feasible generalized least squares (FGLS) and panel corrected standard error (PCSE) techniques, we checked the impact of the GCC countries OFDI on private investment and found that OFDI significantly complement private investment in the GCC countries. The complementary impact of OFDI on private investment in the GCC countries can be used as a tool to promote private investment, diversify their economies and hedge against the pitfalls of addiction to the hydrocarbon.

The Online Public Sphere in the Gulf: Contestation, Creativity, and Change

AbstractThis introductory essay sets the stage for this special issue, which explores how online media has changed the Arabian Gulf region's politics, economies, and social norms.2It provides an overview of the most important themes, arguments, and findings tackled in the four essays in this issue, as well as the intersections, overlaps, and divergences emerging from, and between, them. In doing so, it explains how the similarities and differences, as well as the most significant underlying themes, emerging from these four essays further our understanding of the online public sphere in the Gulf region as a space for contestation, creativity, and change. This introductory essay identifies three important, and overlapping, themes found in this special issue: techno-euphoria, cyberwars, and the public sphere. It concludes by proposing possible next steps and future research on the important, yet understudied, links between the online public sphere and the sociopolitical environment of the Gulf.

Egyptian Economic and De-Democratization Trends

The literature on economic determinants of democratization has identified most importantly the effects of economic development and income distribution. In this regard, Egypt had exhibited higher average incomes and declining inequality between 1999 and 2012. However, by 2015, the level of income inequality had reverted near its level in 2008. Although income distribution data are not available for later years, trends in the composition of economic activity suggest that income inequality has likely continued to increase, disempowering the middle class further and contributing to de-democratization. A main puzzle during the build-up to the Arab Spring revolts of 2010-11 was the fact that income inequality in Tunisia and Egypt was relatively low in comparison to countries at similar stages of economic development. Especially for Egypt, this analysis had ignored the vast between-country and within-oil-exporting-country income inequalities, which, according to WID.world scholars' calculations, had rendered the Middle East the most unequal region in the world. Post-2011 trends have simultaneously integrated Egypt more closely with Gulf economies and transformed the Egyptian economy more closely to follow the investment patterns of the latter. Thus, the short-lived economic trends that fueled demands for democratization in Egypt have been reversed, underpinning the regression of her political system to resemble more closely those of her Gulf benefactors. Although large investments in infrastructure may potentially lead to enhanced productivity and economic re-empowerment of the middle class, past experiences of Gulf economies to which the Egyptian economy is converging suggest otherwise.

Greece Financial Crises and Sukuk Markets: Experience From Gulf Countries

Many studies have been carried out to investigate the impact of recent European financial crises on the performance of financial instruments in other regions. Nevertheless, there have been insufficient studies explaining such impact on Islamic financial instrument. In particular, whether Greece Financial crises have affected performance of Sukuk traded in Gulf Markets needs to be answered. This study is aimed at empirically investigating the causality of credit and liquidity risk on Sukuk Markets in Gulf economies in the period of Greece Financial Crises. We analyzed the Sukuk data by employing Granger casuality test, with all the associated vector autoregression model procedures. Our findings show that Bahrain sukuk market is cointegrated with those of Qatar and UAE in the full period observation. Meanwhile, during the crisis, Qatar Sukuk market is cointegrated with those of UAE Bahrain. We also find that Bahrain Sukuk triggers market shock in both Qatar and UAE Sukuk markets. Bahrain consistently causes changes in price and spread of UAE Sukuk, both in the context of the full period and the during-crisis period. DOI: 10.15408/aiq.v9i1.3733

Editor's Viewpoint: Beyond Oil: A New Middle East Vision

Editor's Viewpoint: Beyond Oil: A New Middle East Vision

Oil, human capital and diversification: the challenge of transition in the UAE and the Arab Gulf States

This research studies the labour and human capital dimensions of diversification and structural change in oil economies, with a focus on the case of the UAE and the Arab Gulf States. It examines how oil‐driven development in the Gulf has resulted in entrenched patterns of employment and migration, which have forestalled efforts by these countries to transition into more sustainable, post‐oil economies. Utilising a mixed methods approach based on secondary data analysis and a survey conducted with 300 firms, it studies how these distortions have evolved as the region has embarked on a number of major diversification efforts over the past four decades. Oil wealth has provided Gulf economies with the capital to create competitive new sources of economic growth, but the challenge remains sustainability: reproducing the labour force in non‐oil industries locally.

Mediterranean migration futures: Patterns, drivers and scenarios

This study explores possible futures of Mediterranean migration based on an evaluation of past, current and future drivers of migration in the region. Since 1950, structural shifts in the political economy of the region have fundamentally changed the Mediterranean migration map. Particularly the rise of Gulf economies and south European growth and EU expansion has transformed the northern Mediterranean and the Gulf into new immigration poles. The main drivers of these changes are economic and political. Contrary to conventional beliefs, the role of environmental and also demographic factors seems comparatively limited, probabilistic and indirect. Future climate change and environmental stress may affect internal movement but are unlikely to result in massive international migration. Under most scenarios, Turkey and other North African countries may well evolve into immigration countries coinciding with increasing immigration from sub-Saharan Africa to the entire Mediterranean.

English

In recent years, the Arab Gulf Countries in particular Gulf Cooperation Council (GCC) has been an attractive market destination for the Asian businesses. China, India, Japan and other Asian countries have huge interest in developing close relationships with the six nations. As an emerging economy in the West EasternAsia, the GCC offer huge interest in doing businesses and become a gate for the Middle Eastern markets. Malaysia, besides the religious affinity that it shares with the Arab Gulf Countries, is also highly interested in expanding its trade relations with the Arab Gulf Economies. Therefore, in this article, an investigation on the countries’ trade compositions and followed by a study on Exports competitiveness were conducted. Finding from the analysis of exports competitiveness of Malaysian products will then be compared to the major Asian exporters in the GCC market. By doing this, it will identify Malaysia’s niche product that could potentially expanded in this market. This will shed a light on the Malaysia’s willingness to enhance market penetration to this economic bloc. Key words: Malaysia, Gulf Cooperation Council (GCC) countries, international trade, economic relations.

The large country effect, contagion and spillover effects in the GCC

This article examines contagion and crisis propagation (spillovers) in the Gulf Cooperation Council (GCC) economies over the period 1960 to 2002. It also examines whether contagion occurred in Saudi Arabia (large country) after the 1987 US stock market crash and the 1997 Thai exchange rate devaluation and whether these contagion shocks spillover to smaller countries of the region. Spillovers are likely to occur among interdependent countries within the same geographical region. Tests based on correlation coefficients, ARCH/GARCH estimates and direct change (generalized least squares regression) propagation effects indicate that contagion from the US stock market crash and the Thai devaluation occurred in Saudi Arabia, and these external shocks were propagated to smaller GCC countries. This suggests that GCC countries are likely to mitigate such propagations through economic integration. Thus, the idea of GCC formation may help insulate Gulf economies against crisis propagation.

Monetary Integration Prospectives :A study in the Experience of Arab Gulf Cooperation Council countries (GCCCs)

The structural Similarity of Arab Gulf economies and the harmony of its economic, Financial and monetary Policies ,besides, as it is an optimum Currency area , that determine adopting fixed exchange rates Policy, also founding a uniform Currency has economically justifiable and notable reasons as it provide a strong and stable Currency Which Will have a status among the World leader Currencies, that will set aside financial stocks in abroad from foreign Currencies values depreciation .Moreover, affirming the significance of giving up Pegging with dollar Which is as Common anchor ,and replacing it with basket of Currencies based on import-Weighted index of GCCCs from currencies, which Consists this basket .Further, Euro is an alternative to be taken into consideration of suggested Uniform Currency exchange rate system.

Book Review of: Meezan Bank’s Guide to Islamic Banking by Muhammad Imran Ashraf Usmani

Islamic banking has been seriously effected by the financial crisis of 2007- 2010. The impending collapse of financial institutions in the Gulf, specially in Dubai and the growing threat of sovereign debt repudiation and default by oil exporting countries has had a particularly severe impact on global Islamic finance growth. Forecasts for Islamic finance transactions have been revised downwards several times during 2009 and riskiness and illiquidity of leading Islamic finance institution are perceived as having increased due to the growing instability of the Gulf economies.

Workforce localization in emerging Gulf economies: the need to fine‐tune HRM

Purpose – This paper sets out to identify HR‐relevant recommendations for workforce localization in the context of emerging Gulf economies. While previous research has focused on topics such as commitment or the influence of stereotypes, this paper aims to suggest concrete steps to help organizations in addressing the full scale of localization from recruitment to retention.Design/methodology/approach – Data were collected predominantly through in‐depth, semi‐structured interviews with HR managers from both the public and private sector.Findings – With a multitude of definitions and approaches to Emiratization, best practices are yet to be established. The paper provides a potential stepping‐stone towards these by identifying some of the adaptations needed to key HR processes to foster localization.Research limitations/implications – There are difficulties in generalizing the data due to the limited sample size and there were significant difficulties in accessing relevant personnel, with another limitatio...