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Has the non-oil sector decoupled from oil sector? A case study of Gulf Cooperation Council Countries

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  • Basher, Syed Abul

Abstract

As oil and gas are exhaustible resources, the need for economic diversification has gained momentum in the Gulf Cooperation Council (GCC) countries immediately after the end of the first oil boom in 1973-74. Economic diversification, in the context of GCC countries, implies development of the non-oil sector and reduction of the proportion of government revenue and export proceeds from the oil and gas sector. Applying newly developed measures of business cycle synchronicity between oil and non-oil sectors in three GCC economies (Kuwait, Qatar and Saudi Arabia), we show both the degree of diversification achieved so far and the direction of diversification in terms of individual non-oil sectors. Overall, Kuwait and Saudi Arabia appear to be moderately ahead than Qatar in reducing their dependence on oil. Nevertheless, by developing large production capacities of natural gas, Qatar has recently reduced its dependence on oil in favor of natural gas. A quantitative assessment of the determinants of business cycle synchronization is also provided.

Suggested Citation

  • Basher, Syed Abul, 2010. "Has the non-oil sector decoupled from oil sector? A case study of Gulf Cooperation Council Countries," MPRA Paper 21059, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:21059
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    Cited by:

    1. Syed Abul Basher & Elsayed Mousa Elsamadisy, 2012. "Country heterogeneity and long-run determinants of inflation in the Gulf Arab states," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 36(2), pages 170-203, June.
    2. Syed Abul Basher & Stefano Fachin, 2013. "The long-run relationship between savings and investment in oil-exporting developing countries: a case study of the Gulf Arab states," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 37(4), pages 429-446, December.
    3. Khalid Rashid Alkhater & Syed Abul Basher, 2016. "The oil cycle, the Federal Reserve, and the monetary and exchange rate policies of Qatar," Middle East Development Journal, Taylor & Francis Journals, vol. 8(1), pages 127-155, January.
    4. Saif Sallam Alhakimi & Hussein Hamood Sharaf-Addin, 2022. "Investigating the Impact of Oil Prices Changes on Financial Market Efficiency in Saudi Arabia for the Period (1980-2018): ARDL Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 12(1), pages 420-426.
    5. Al-Maamary, Hilal M.S. & Kazem, Hussein A. & Chaichan, Miqdam T., 2017. "The impact of oil price fluctuations on common renewable energies in GCC countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 989-1007.
    6. International Monetary Fund, 2013. "Algeria: Selected Issues Paper," IMF Staff Country Reports 2013/048, International Monetary Fund.

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    More about this item

    Keywords

    Business cycle; Synchronization; Oil price; Fiscal policy; GCC countries;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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