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Factor Accumulation and the Determinants of TFP in the GCC

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  • Raphael Espinoza

Abstract

GDP growth in the GCC has been considerably higher than in advanced economies or other oil exporters since 1986. The paper shows that the GCC countries have swiftly accumulated large stocks of physical capital but the population increase and the shift away from oil meant that capital intensity actually decreased or remained roughtly constant. On teh other hand, the efforts that have been made to improve human capital would have had positive effects on growth though educational attainment remains below what is achieved by countries with similar levels of income. A growth accounting exercise suggests as a result that the development of Bahrain and Saudi Arabia was hampered by declining TFP, while TFP growth in Qatar and the UAE would have been low. One potential explanation is that the kind of capital that has been accumulated in the region (aircraft, computer equipment, electrical equipment) is not fully productive because the labor force is not educated enough. The paper also discusses the lessons from the impirical growth literature for the GCC. The poor quality of institutions and the large size of government consumption, both of which ar possile symptoms of a resource curse, could explain the disappointing TFP growth.

Suggested Citation

  • Raphael Espinoza, 2012. "Factor Accumulation and the Determinants of TFP in the GCC," OxCarre Working Papers 094, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  • Handle: RePEc:oxf:oxcrwp:094
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    Cited by:

    1. World Bank, 2013. "Oil Rules : Kazakhstan's Policy Options in a Downturn," World Bank Other Operational Studies 16721, The World Bank.
    2. Raphael Espinoza, 2012. "Government Spending, Subsidies and Economic Efficiency in the GCC," OxCarre Working Papers 095, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.

    More about this item

    Keywords

    Gult Cooperation Council; Growth Accounting; Middle East and North Africa; Resource Curse;

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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