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Soaring of the Gulf Falcons: Diversification in the GCC Oil Exporters in Seven Propositions

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  • Reda Cherif
  • Fuad Hasanov

Abstract

A key priority for the Gulf Cooperation Council (GCC) countries is to create a dynamic non-oil tradable sector to support sustainable growth. Since export diversification takes a long time, it has to start now. We argue that the failure to diversify away from oil stems mainly from market failures rather than government failures. To tackle market failures, the government needs to change the incentive structure for workers and firms. Experiences of oil exporters that managed to diversify suggest that a focus on competing in international markets and an emphasis on technological upgrade and climbing the “quality ladder” are crucial.

Suggested Citation

  • Reda Cherif & Fuad Hasanov, 2014. "Soaring of the Gulf Falcons: Diversification in the GCC Oil Exporters in Seven Propositions," IMF Working Papers 2014/177, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2014/177
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    Cited by:

    1. Ari, Ibrahim & Akkas, Erhan & Asutay, Mehmet & Koç, Muammer, 2019. "Public and private investment in the hydrocarbon-based rentier economies: A case study for the GCC countries," Resources Policy, Elsevier, vol. 62(C), pages 165-175.
    2. John Baffes & M. Ayhan Kose & Franziska Ohnsorge & Marc Stocker, 2015. "The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses," Koç University-TUSIAD Economic Research Forum Working Papers 1504, Koc University-TUSIAD Economic Research Forum.
    3. Kaya Abdullah & Tsai I-Tsung, 2016. "Inclusive Economic Institutions in the Gulf Cooperation Council States: Current Status and Theoretical Implications," Review of Middle East Economics and Finance, De Gruyter, vol. 12(2), pages 139-173, August.
    4. Alberto Behar & Armand Fouejieu, 2018. "External adjustment in oil exporters: The role of fiscal policy and the exchange rate," The World Economy, Wiley Blackwell, vol. 41(3), pages 926-957, March.
    5. Nusair, Salah A., 2019. "Oil price and inflation dynamics in the Gulf Cooperation Council countries," Energy, Elsevier, vol. 181(C), pages 997-1011.
    6. Fakhri J. Hasanov & Muhammad Javid & Frederick L. Joutz, 2022. "Saudi Non-Oil Exports before and after COVID-19: Historical Impacts of Determinants and Scenario Analysis," Sustainability, MDPI, vol. 14(4), pages 1-38, February.
    7. Ludmila Shkvarya & Yelena Frolova, 2017. "Transformations In Socio-Economic Development Of The Gulf Group States," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 570-578.
    8. Eric W. Djimeu & Luc-Désiré Omgba, 2018. "Oil windfalls might not be the problem in oil-producing countries: evidence from the impact of oil shocks on export diversification," Working Papers hal-04141788, HAL.
    9. Nusair, Salah A., 2016. "The effects of oil price shocks on the economies of the Gulf Co-operation Council countries: Nonlinear analysis," Energy Policy, Elsevier, vol. 91(C), pages 256-267.
    10. Ansari, Dawud, 2017. "OPEC, Saudi Arabia, and the shale revolution: Insights from equilibrium modelling and oil politics," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 111, pages 166-178.
    11. Bigerna, Simona & D’Errico, Maria Chiara & Polinori, Paolo, 2022. "Dynamic forecast error variance decomposition as risk management process for the Gulf Cooperation Council oil portfolios," Resources Policy, Elsevier, vol. 78(C).
    12. Sweidan, Osama D. & Elbargathi, Khadiga, 2023. "Economic diversification in Saudi Arabia: Comparing the impact of oil prices, geopolitical risk, and government expenditures," International Economics, Elsevier, vol. 175(C), pages 13-24.
    13. Mohammad W. Alomari & Ala' G. Bashayreh, 2020. "Modeling the Exports Diversification in the Oil Countries Growth: The Case of Gulf Cooperation Council Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 119-129.
    14. Karunanithi Kriskkumar & Niaz Ahmad Mohd Naseem, 2019. "Analysis of Oil Price Effect on Economic Growth of ASEAN Net Oil Exporters," Energies, MDPI, vol. 12(17), pages 1-19, August.
    15. Uddin, Md Akther & Masih, Mansur, 2015. "Finance, growth and human development: An Islamic economic development perspective," MPRA Paper 65818, University Library of Munich, Germany.
    16. Dahmani Mohamed Driouche & Attouchi Manel & Chenini Moussa & Benbouziane Mohamed, 2020. "Asymmetric Responses of Oil Price Shocks on Economic Growth in Algeria: An Empirical Analysis through NARDL Approach," Energy Economics Letters, Asian Economic and Social Society, vol. 7(2), pages 74-93, December.
    17. Franklin Obeng-Odoom, 2023. "Spatial political economy: the case of metropolitan industrial policy," Review of Evolutionary Political Economy, Springer, vol. 4(1), pages 137-163, April.

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