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Do the Gulf Oil-Producing Countries Influence Regional Growth? T+L3886he Impact of Financial and Remittance Flows

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  • Nadeem Ilahi
  • Riham Shendy
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    Abstract

    This paper tests the association between the Gulf Cooperation Council (GCC) countries'' financial and remittance outflows and regional growth in the Middle East. The findings, based on 35-year panel data, indicate that growth rates of real GDP, private consumption and private investment in regional countries are strongly associated with remittance outflows from and the accumulation of financial surpluses in the GCC. Unlike in other developing and emerging market countries, growth in regional countries is not influenced by growth in the North, and is not export led. Linkages with the GCC could help sustain output growth in the regional countries in the face of the global economic slowdown and oil price shocks and could provide diversification gains to international capital seeking markets uncorrelated with Northern and emerging market countries.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 08/167.

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    Length: 17
    Date of creation: 01 Jul 2008
    Date of revision:
    Handle: RePEc:imf:imfwpa:08/167

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    Keywords: Emerging markets; Capital flows; Oil producing countries; Economic growth; Gross domestic product; Private consumption; Private investment; Outward remittances; Regional shocks; Oil prices; remittances; remittance; growth rate; gdp growth; business cycles; remittance outflows; business cycle; real gdp; growth rates; remittance flows; gdp growth rates; gdp growth rate; migration; remittance outflow; remittance inflows; growth cycles; impacts of remittances; regional economic growth; gdp per capita; remittances data; gdp deflator; worker remittances; migrant; gdps; capital formation; bilateral remittances;

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    1. M. Ayhan Kose & Kei-Mu Yi, 2005. "Can the standard international business cycle model explain the relation between trade and comovement?," Working Papers 05-3, Federal Reserve Bank of Philadelphia.
    2. M. Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2006. "Financial Globalization," IMF Working Papers 06/189, International Monetary Fund.
    3. Michael A. Kouparitsas, 1996. "North-South business cycles," Working Paper Series, Macroeconomic Issues WP-96-9, Federal Reserve Bank of Chicago.
    4. Philip R. Lane & Gian Maria Milesi-Ferretti, 2006. "The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities,1970–2004," The Institute for International Integration Studies Discussion Paper Series iiisdp126, IIIS.
    5. Andreas Billmeier & Isabella Massa, 2007. "What Drives Stock Market Development in the Middle East and Central Asia," IMF Working Papers 07/157, International Monetary Fund.
    6. M. Ayhan Kose & Eswar Prasad & Christopher Otrok, 2008. "Global Business Cycles," IMF Working Papers 08/143, International Monetary Fund.
    7. Jeffrey A. Frankel & Andrew K. Rose, 1996. "The Endogeneity of the Optimum Currency Area Criteria," NBER Working Papers 5700, National Bureau of Economic Research, Inc.
    8. M. Ayhan Kose & Kei-Mu Yi, 2001. "International Trade and Business Cycles: Is Vertical Specialization the Missing Link?," American Economic Review, American Economic Association, vol. 91(2), pages 371-375, May.
    9. M. Ayhan Kose & Marco Terrones & Eswar Prasad, 2003. "Volatility and Comovement in a Globalized World Economy," IMF Working Papers 03/246, International Monetary Fund.
    10. Çigdem Akin & M. Ayhan Kose, 2007. "Changing Nature of North-South Linkages," IMF Working Papers 07/280, International Monetary Fund.
    11. Vivek B. Arora & Athanasios Vamvakidis, 2004. "How Much Do Trading Partners Matter for Economic Growth?," IMF Working Papers 04/26, International Monetary Fund.
    12. Robin L. Lumsdaine & Eswar Prasad, 1999. "Identifying the Common Component in International Economic Fluctuations," IMF Working Papers 99/154, International Monetary Fund.
    13. M. Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(2), pages 143-197, June.
    14. Vivek Arora & Athanasios Vamvakidis, 2005. "The Implications Of South African Economic Growth For The Rest Of Africa," South African Journal of Economics, Economic Society of South Africa, vol. 73(2), pages 229-242, 06.
    15. Vivek B. Arora & Athanasios Vamvakidis, 2005. "The Implications of South African Economic Growth for the Rest of Africa," IMF Working Papers 05/58, International Monetary Fund.
    16. Connel Fullenkamp & Thomas F. Cosimano & Michael T. Gapen & Ralph Chami & Peter Montiel & Adolfo Barajas, 2008. "Macroeconomic Consequences of Remittances," IMF Occasional Papers 259, International Monetary Fund.
    17. AkIn, Cigdem & Kose, M. Ayhan, 2008. "Changing nature of North-South linkages: Stylized facts and explanations," Journal of Asian Economics, Elsevier, vol. 19(1), pages 1-28, February.
    18. Philip R. Lane & Gian-Maria Milesi-Ferretti, 2006. "The External Wealth of Nations Mark II," IMF Working Papers 06/69, International Monetary Fund.
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    Cited by:
    1. Francesco Grigoli & Dalia Hakura, 2010. "Recoveries in the Middle East, North Africa, and Pakistan," IMF Working Papers 10/122, International Monetary Fund.
    2. Tahsin Saadi Sedik & Oral Williams, 2011. "Global and Regional Spillovers to GCC Equity Markets," IMF Working Papers 11/138, International Monetary Fund.
    3. Jaime Espinosa-Bowen & Nadeem Ilahi & Fahad Alturki, 2009. "How Russia Affects the Neighborhood," IMF Working Papers 09/277, International Monetary Fund.

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