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What are the Potential Economic Benefits of Enlarging the Gulf Cooperation Council?

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Author Info

  • Saade Chami
  • Selim Elekdag
  • Ivan Tchakarov

Abstract

This paper uses a variant of the IMF's Global Economy Model (GEM) to estimate the macroeconomic benefits of Yemen's accession into the Gulf Cooperation Council (GCC). After calibrating the model to Yemen and the GCC block, several simulations are carried out to estimate the potential impact of economic integration on both regions. The paper draws two fundamental conclusions. First, regional integration enhances competition which produces large economic benefits for both Yemen and the GCC. In particular, we show that in some cases economic integration can increase GDP in Yemen by up to 14% and in the GCC by up to 7% over the long run. Second, even if market structures do not improve substantially, GCC enlargement can still generate substantial spillover gains in each block. More specifically, one measure of economic prosperity measured by consumption can increase by up to 7% in Yemen and up to 8% in the GCC.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 21 (2007)
Issue (Month): 4 ()
Pages: 521-548

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Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:521-548

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Related research

Keywords: Regional integration; competition; IMF's Global Economy Model (GEM);

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References

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  1. Maurice Schiff & L. Alan Winters, 2003. "Regional Integration and Development," World Bank Publications, The World Bank, number 15172, October.
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Cited by:
  1. Shafik Hebous, 2006. "On the Monetary Union of the Gulf States," Kiel Advanced Studies Working Papers 431, Kiel Institute for the World Economy.
  2. Selim Elekdag, 2012. "Social Spending in Korea," IMF Working Papers 12/250, International Monetary Fund.
  3. Takagi, Shinji, 2012. "Establishing Monetary Union in the Gulf Cooperation Council: What Lessons for Regional Cooperation?," ADBI Working Papers 390, Asian Development Bank Institute.

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