The Macroeconomics of the Arab States of the Gulf

The economies of the Arab states of the Gulf have gone through considerable changes in the last decade,spurred by high oil prices and ambitious diversification plans. Large-scale immigration provided the laborforce while capital inflows and financial development leveraged oil wealth to finance diversification. Thecollapse in real estate prices around the world followed by the global crisis slowed growth and raisedquestions on the appropriateness of what has been dubbed the "GCC model."The Gulf Cooperation Council (GCC) countries have thus far managed to leverage their large natural resourcewealth to achieve economic prosperity and finance social advances, and the region also emerged as animportant source of funds for the other countries in the Middle East. Nevertheless, the GCC face severalchallenges. Productivity growth must increase to fully reap the benefits of investment. Jobs must be createdfor the nationals and the growing youth population. State intervention (which is prevalent, given that oilrevenues accrue to the government) must become efficient and be used to diversify and modernize theeconomy. In addition, the recent crisis highlighted the importance of fiscal, monetary, and financial stabilitypolicies to manage macroeconomic cycles. This book analyses these issues and combines data andeconometric analysis with theoretical discussions. It concludes with a discussion of the importance of theGCC for the wider region.