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

Author

Listed:
  • Mr. Selim A Elekdag
  • Mr. Saade Chami
  • Mr. Ivan Tchakarov

Abstract

This paper uses a variant of the IMF's Global Economy Model (GEM) to estimate the macroeconomic effects of Yemen's full accession into the Gulf Cooperation Council (GCC). After calibrating the model to Yemen and the GCC countries, several simulations were carried out to estimate the potential impact of economic integration on both. The paper draws two fundamental conclusions. First, further steps in regional integration would enhance competition and produce large economic benefits for both Yemen and the GCC countries. In particular, we show that in some cases economic integration could increase GDP in Yemen by as much as 18 percent and in the GCC by as much as 20 percent over the long run. Second, even if market structures do not improve substantially, GCC enlargement can still generate substantial spillover gains with consumption increasing by up to 7 percent in Yemen and 8 percent in the GCC, respectively.

Suggested Citation

  • Mr. Selim A Elekdag & Mr. Saade Chami & Mr. Ivan Tchakarov, 2004. "What Are the Potential Economic Benefits of Enlarging the Gulf Cooperation Council?," IMF Working Papers 2004/152, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2004/152
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    References listed on IDEAS

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    Cited by:

    1. Mr. Selim A Elekdag, 2012. "Social Spending in Korea: Can it Foster Sustainable and Inclusive Growth?," IMF Working Papers 2012/250, International Monetary Fund.
    2. Burke, Edward, 2012. "One blood and one destiny? Yemen’s relations with the Gulf Cooperation Council," LSE Research Online Documents on Economics 55241, London School of Economics and Political Science, LSE Library.
    3. Shinji Takagi, 2012. "Establishing Monetary Union in the Gulf Cooperation Council: What Lessons for Regional Cooperation?," ADBI Working Papers 390, Asian Development Bank Institute.
    4. Hebous, Shafik, 2006. "On the monetary union of the Gulf States," Kiel Advanced Studies Working Papers 431, Kiel Institute for the World Economy.

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