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"Investments, Foreign Persian Gulf Region"
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Diversification and the resource curse: An econometric analysis of GCC countries
This research explores the effects of significant global economic shocks, such as the 2008 Global Financial Crisis and the 2020 COVID-19 pandemic, on GDP growth in the Gulf Cooperation Council (GCC) nations. Employing a dynamic generalized method of moments (GMM) model, the analysis highlights the strong momentum effect of lagged GDP growth, where past performance plays a critical role in shaping current economic outcomes. The findings also reveal that natural resources continue to positively influence short-term growth, but with diminishing returns over time, supporting the resource curse hypothesis and underscoring the need for broader structural reforms to ensure long-term sustainability. In addition, the results show that external investments flowing into the country, trade balance, and inflation emerge as key drivers of economic growth. While moderate inflation is positively associated with economic expansion, unemployment exerts a significant negative effect on GDP growth, particularly in models that account for country-specific characteristics. This emphasizes the need for labor market reforms to improve employment rates and support sustainable development. The role of gross capital formation, particularly in both the dynamic GMM and random effects models, further underscores the importance of strategic domestic investment, especially during periods of global disruption. These findings emphasize the critical need for economic diversification in the GCC. Policymakers should focus on attracting foreign investment, managing inflation, enhancing human capital, and boosting domestic investment to mitigate the adverse effects of the resource curse and secure sustainability. While market capitalization and oil rents may stimulate short-term growth, their long-term sustainability remains uncertain without greater diversification. Both external and domestic investments emerge as critical drivers of long-term growth, while persistent challenges such as inflation and unemployment continue to pose risks to economic stability. The study highlights the need to reduce reliance on oil and leverage human capital to build more resilient economies capable of adapting to future challenges. By offering dynamic, empirical insights into the balance between resource reliance and sustainable growth, this research adds valuable insights to the policy discussion on economic diversification in the GCC. Policymakers are urged to prioritize FDI, inflation management, domestic capital formation, and human capital development to mitigate vulnerabilities and ensure sustainable economic growth in the face of ongoing global uncertainties.
Journal Article
SIXTY YEARS OF FDI EMPIRICAL RESEARCH
International capital allocation influences has a social, political and economic impact on the trading countries. Thus, it has been investigated so as to determine the key factors of capital flows and their impact on the host country’s economy. A significant amount of empirical research has been conducted over the past 60 years regarding foreign direct investment (FDI) inflows in the developing and undeveloped countries. The purpose of the present study is to present a literature review of empirical papers regarding the FDI in developing countries and their interaction with the economic theories and systems. Thus, we aim at investigating the interaction between the economic and social events and the empirical examination of FDI so as to study whether these facts have influenced the orientation of the researchers through time. In particular, empirical studies published from 1950 to 2015 have been selected. The papers are presented according to the publication date and thus four periods are studied: from 1950 to 1973, from 1974 to 1989, from 1990 to 2004 and from 2005 to 2015. The present study focuses on the FDI inflows, thus the empirical papers investigated solely the FDI exports are not presented. Furthermore, the papers have been selected so that the countries of the samples cover each geographical region, while in certain papers FDI are studied as a dependent variable and in the rest as an independent one. The papers are discussed based on the statistical method applied, the sample chosen and the trends on the variables used. It is argued that the economic theories and studies influence the orientation of the studies. Also, recent empirical papers include larger samples and countries of every geographical region despite the fact that most of them focus on the largest recipients of FDI, that is to say the Asian and the Latin American countries.
Journal Article
Sovereign wealth funds: dangers and opportunities
Soaring oil prices since the early 2000s have led to a historic transformation of wealth from consuming regions to major oil exporters. In recent years many of these exporters have set up oil funds to utilize their massive and growing oil revenues. These funds are divided into two categories-stabilizing and saving. Their large investments in western markets have raised concerns that they might be driven by political and strategic interests rather than commercial ones. This article examines oil funds in the Persian Gulf, Norway and Russia. It discusses US and European proposals to regulate oil funds' investments. The article examines the International Monetary Fund's efforts to forge a consensus on a 'code of conduct' that would guide the relationship between oil funds and the recipient markets. The analysis argues against excessive regulation.
Journal Article
DOES ARAB SPRING HAVE A SPILLOVER EFFECT ON DUBAI FINANCIAL MARKET?
In the wake of a dramatic political change, such as the so-called “Arab Spring”, the associated ramifications on the stock markets, especially the regional ones, are questionable. This study examines the impact of the Arab spring on the returns and volatility of a financial market in a stable neighboring country. Specifically, we contribute to the extant literature by investigating the spillover effect of the regional turmoil on Dubai Financial Market (DFM). Due to the domino-effect-like political changes, a major Arab Spring event is defined by the shocking regime change in Egypt during the period between the departure of the former and long-lasted Egyptian president Hosni Mubarak on February 11th, 2011, and conducting the parliamentary elections there on November 30th, 2011. Both the volatility and returns of DFM are examined around the identified period. We employ the daily returns of seven indices at DFM for the period between January 1st, 2008 and December 31st, 2012 using GARCH model to analyze the effects of Arab Spring sparking in the region on volatility and returns. Moreover, we use Event Study method to examine the effect of the dramatic political change on the stock market returns. The findings of the study reveal that the volatility of the overall DFM has not been impacted except for two indices at DFM; Transportation and Telecommunications. The results remain robust when TGARCH model is run. Further, the Event Study results suggest that the Arab Spring has not affected the returns of any of the DFM indices during the above period since both the cumulative abnormal returns (CAR) and the cumulative average abnormal returns (CAAR) are insignificant. There are implications to the regulators, the current and potential international and local investors and portfolio managers who are interested in DFM.
Journal Article
The Maghreb's Subordinate Position in the World's Political Economy
Yet rather than offering a country-by-country treatment of Maghrebi political economy, this article endeavors, in the spirit of Katzenstein's World of Regions, to examine the region writ large.3 It combines a regionwide approach with a sectoral focus to understanding the Maghreb's situation in the international political economy.4 Such a preoccupation with economic sectors not only facilitates a nuanced understanding of Maghrebi political economy; it also goes far toward reaffirming the crucial and central politicaleconomy connections between the Maghreb and broader geographical spaces: the Mediterranean Basin (including its European and Mashreqi spheres), the Persian Gulf, sub-Saharan Africa and the North Atlantic. The preeminence of import-substitution industrialization (ISI) throughout the developing world was evident in the region, ranging from Algeria's profound statism and leading role in the Third World movement and Ben Salah's efforts at collectivization to ISI in Tunisia in the 1960s, Hassan IPs statist Moroccanization programs and Qadhafi's control of Libyan oil in the 1970s.10 Again, it would not do to ignore the fundamental institutional and ideological differences among the four countries, but all four reached similar predicaments in their economies by the 1980s, including government financial crises, high debt burdens, severe shortfalls in food security, and violent civil unrest.
Journal Article
Petroeuros: A Threat to U.S. Interests in the Gulf?
Dollar-priced oil system creates a virtuous cycle for the United States, making the country's massive trade deficits tolerable and its foreign military operations financially bearable. Looney assesses the likelihood of a shift towards petroeuro oil pricing arrangement and its impact on United States' military and economic power. He cites that breaking the dollar/oil link would drastically reduce the role of US dollar as an international currency.
Journal Article
Gulf Security and the Iranian Challenge
When examing Gulf security, consideration should be given to the following five themes. First is the collapse of the Arab regional system in the aftermath of the Iraqi invasion of Kuwait and the inability of the Arab League and other regional organizations to cope with the 1990 crisis. Second is the US policy of dual containment-its foundations and potential ramifications-along with the continuing international sanctions against Iraq and the ongoing conflict between the United States and Iran. Third is the collapse of the Soviet Union and the end of the Cold War-watersheds with two important implications for Gulf security: a strengthened US commitment to ensuring security in the Gulf, which includes the frequent docking of US ships at Gulf ports, prepositioning of military equipment, and the periodic deployment of military personnel; and ongoing Russian military sales to Iran, including the transfer of advanced technology and military hardware. A fourth theme is Arab-Israeli peace which, while having generally reduced tensions between Arab nations and the Jewish state, has increased the probability of hostilities in the Gulf. Fifth is the declining state of the Iranian economy, due in part to fiscal mismanagement, a lack of skilled administrators and high rates of population growth. Economic prosperity is inextricably dependent upon political stability. In reaction to continual economic deterioration, domestic discontent may spill over and manifest itself in the adoption of more radical foreign policy options. The proposition that the Islamic Republic of Iran is generally viewed today by the international community as a major threat to the stability of the Gulf region is the focus of this article.
Journal Article
Kuwait's Economic Quandary
Discusses dependence on oil exports, proposed regional economic development and increased ties with Iraq, boundary adjustments, control of the Persian Gulf, international investment, and relations with the US, in context of US policy of overthrowing Saddam Hussein in Iraq.
Journal Article
Iran's Pragmatic Regional Policy
Given the systemic barriers and domestic problems that Iran faces in dealing with the new countries that emerged from the ashes of the Soviet empire, the record of Iran's performance in Central Asia has been relatively good. By avoiding the ideological trap that adversely affected its other relations, Iran succeeded in preventing a serious rupture in relations with the Central Asian states. Similarly, despite its economic and financial handicaps, Iran has managed to establish some presence in the region. Nonetheless, Iran's inability to come to terms with the realities of the post-Soviet international system, most notably the pervasive US influence, and to adjust its policies accordingly, continues to hamper its efforts in Central Asia.
Journal Article