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The Prospect of the GCC Monetary Union and its Expansion to Other MENA Countries

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  • Kamara, Mohamed Sheriff Hamid

    (Higher Colleges of Technology, Al Ain, United Arab Emirates)

Abstract

This study investigated the possibility of expanding the GCC monetary union to other MENA countries using cluster analysis for the period 2000-2018. It also examined whether the economic characteristics of the countries provide evidence for the readiness of countries for the proposed union. The findings show that there was heterogeneity in the GCC and MENA countries suggesting that the countries were not yet economically ready for the launch of the monetary union. We found evidence in support of the expansion of the GCC monetary union to other MENA countries with two categories of countries, the core and the periphery. We also revealed key variables, including inflation differential, debt service requirement, and current account balance, which clearly demarcated the GCC and other MENA countries. These findings underscore the need for policy-makers in MENA countries to strengthen intraregional trade creating policy, policy coordination, and harmonisation for a successful and sustainable monetary union.

Suggested Citation

  • Kamara, Mohamed Sheriff Hamid, 2024. "The Prospect of the GCC Monetary Union and its Expansion to Other MENA Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 39(2), pages 454-482.
    • Handle: RePEc:ris:integr:0908
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    Keywords

    optimum currency area; Monetary Union; cluster analysis; Middle East and North Africa (MENA); Gulf Cooperation Council (GCC) economic integration;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy

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