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Impact of global economic imbalance on migrant workers and economies of the Gulf Cooperation Council

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  • Marzovilla, Olga
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    Abstract

    GCC Countries are characterized by a high incidence of foreigners on both the overall population and the labour force as well as by deep inequalities in social and economic term. These features have influenced the labour market and fuelled mutual tensions and grievances between nationals and foreigners. Consequently, these Countries need to reconcile the demands of economic growth with those of social stability. The latter requires a more equitable allocation of rights and duties along with not only more effective actions in terms of human rights, but also more stable economic dynamics, that prevents the redistributive effects of inflation. The anti-inflationary objective is a priority for Gulf Countries, which entails not only countering the effects, but also removing the causes of inflation. The experience of the new millennium showed that the dollar peg, which characterizes the exchange rate regime of the GCC Countries, was a major vehicle of inflation for Gulf economies and suggests the advisability for its amendment. The alternative proposed in this article is to adopt a basket peg system whereby national currencies could be anchored to a basket of strong currencies that mirror direction and intensity of commercial and financial flows on the international market.

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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24210.

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    Date of creation: 25 May 2010
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    Handle: RePEc:pra:mprapa:24210

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    Keywords: GCC countries; exchange rate regimes; basket peg; dollar peg; inflation; migration; labour market;

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    1. Behrouz Guerami & S. Nuri Erbas & George T. Abed, 2003. "The GCC Monetary Union," IMF Working Papers 03/66, International Monetary Fund.
    2. Richard N. Cooper, 2005. "Living with Global Imbalances: A Contrarian View," Policy Briefs PB05-03, Peterson Institute for International Economics.
    3. Ugo Fasano-Filho & Rishi Goyal, 2004. "Emerging Strains in GCC Labor Markets," IMF Working Papers 04/71, International Monetary Fund.
    4. Magda E. Kandil & Hanan Morsy, 2009. "Determinants of Inflation in GCC," IMF Working Papers 09/82, International Monetary Fund.
    5. Michael Dooley & David Folkerts-Landau & Peter Garber, 2005. "An essay on the revived Bretton Woods system," Proceedings, Federal Reserve Bank of San Francisco, issue Feb.
    6. Hesham Alogeel & Maher Hasan, 2008. "Understanding the Inflationary Process in the GCC Region," IMF Working Papers 08/193, International Monetary Fund.
    7. McKinnon, Ronald I., 2005. "Trapped by the international dollar standard," Journal of Policy Modeling, Elsevier, vol. 27(4), pages 477-485, June.
    8. Amar Bhidé & Edmund Phelps, 2007. "A Dynamic Theory of China–U.S. Trade," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 8(3), pages 7-25, July.
    9. Miranda Xafa, 2007. "Global Imbalances: Do They Matter?," Cato Journal, Cato Journal, Cato Institute, vol. 27(1), pages 59-68, Winter.
    10. Naufal, George S & Termos, Ali, 2009. "The Responsiveness of Remittances to the Oil Price: The Case of the GCC," IZA Discussion Papers 4277, Institute for the Study of Labor (IZA).
    11. Habib, Maurizio Michael & Stráský, Jan, 2008. "Oil exporters: in search of an external anchor," Working Paper Series 0958, European Central Bank.
    12. Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2004. "The revived Bretton Woods system," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 9(4), pages 307-313.
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