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Determinants of Economic Development: A Case of Gulf Cooperation Council (GCC) Countries

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  • Majed Alharthi

Abstract

The main objective of this research is to identify the determinants of economic development in Gulf Cooperation Council (GCC) countries over the period of 1996-2016. The economic growth of GCC countries has slowed down due to a sharp drop in oil prices as GCC countries are depending on oil exportation for their economies. The GCC countries preferred to diversify their economies through the strategic plans called Vision 2030. The Vision 2030 for Gulf countries started in Saudi Arabia in 26 April 2016 when the Crown Prince (Mohammad bin Salman Al-Saud) declared that Saudi Arabia has to not depend on oil exportation substantially and that the diversification of oil is a must. The economic growth can be measured through the gross domestic production (GDP). Higher GDP indicates a better economy and higher standards of lives (welfare). Based on this, this research is finding the main indicators of economic development through regressions of fixed-effects model (FEM), random-effects model (REM), generalized methods of moments (GMM) and generalized least squares (GLS) models. The results show that production and rule of law strongly support the economy. In contrast, political instability and a larger population impact economic growth significantly and negatively. In addition, the global financial crisis (GFC) also decreased the economic strength significantly. This study helps the policymakers in economics sector to focus on the positive determinants and to avoid (or reduce) the implementation of the negative factors. In addition, the researcher on economics can be benefited from this study.

Suggested Citation

  • Majed Alharthi, 2019. "Determinants of Economic Development: A Case of Gulf Cooperation Council (GCC) Countries," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(11), pages 1-12, November.
    • Handle: RePEc:ibn:ijefaa:v:11:y:2019:i:11:p:12
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    References listed on IDEAS

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    Cited by:

    1. Elzaki, Raga M., 2023. "Challenges of food security in the Gulf Cooperation Council countries: an empirical analysis of fixed and random effects," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(1), March.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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