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The long-run relationship between savings and investment in oil-exporting developing countries: a case study of the Gulf Arab states

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  • Syed Abul Basher
  • Stefano Fachin

Abstract

The relationship between national saving and investment over the long term is examined for six Gulf Arab oil-exporting developing countries -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. We show that, provided some large outliers are properly accounted for, long-run equilibrium relationships between saving and investment (both total and fixed) exist in these countries. Since these countries have typically large current account surpluses such relationships cannot be explained by standard arguments. Our hypothesis is that the response of investment to saving largely depends on domestic absorptive capacity.

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File URL: http://hdl.handle.net/10.1111/opec.12006
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Bibliographic Info

Article provided by Organization of the Petroleum Exporting Countries in its journal OPEC Energy Review.

Volume (Year): 37 (2013)
Issue (Month): 4 (December)
Pages: 429-446

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Handle: RePEc:bla:opecrv:v:37:y:2013:i:4:p:429-446

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Cited by:
  1. Christian Dreger & Teymur Rahmani, 2014. "The Impact of Oil Revenues on the Iranian Economy and the Gulf States," Discussion Papers of DIW Berlin 1369, DIW Berlin, German Institute for Economic Research.
  2. Jean-Pierre Allegret & Cécile Couharde & Dramane Coulibaly & Valérie Mignon, 2013. "Current accounts and oil price fluctuations in oil-exporting countries: the role of financial development," EconomiX Working Papers 2013-29, University of Paris West - Nanterre la Défense, EconomiX.

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