Economic Integration of GCC Countries: Developments Since
Economic Integration of GCC Countries: Latest Developments Since 2010
It is important to examine the Gulf Cooperation Council (GCC) Key Economic Indicators. Primarily, 2014 Key economic indicators will present statistical information, which will seek to foster economic determination and engineer the determination of current and future performances. A collective economic indicator examines aggregate earning reports, list of economic summaries relating to this region and as well as, reflecting on various macroeconomic indices. This report will prove that the GCC (2014) economic indicators are collective in answering aggregate macroeconomic challenges. This study is a collective possible research leading to the construction of key economic indicators (2014) analysis as adopted by GCC partners. GCC economies have been growing tremendously in the past ten years. This study focuses solely on some of the serious economic developments and polices evident in the region in the past four years. These may be considered as the key success factors even with the inherent economic meltdowns around the globe.
Previous research in relation to GCC economic indicators have been fostered in examining interrelation of members like customs union. However, there has been trivial research examining the level of Key economic indicators of member states. Therefore, in this regard, it is positive to examine the Key economic indicators of the union. The GCC is an economic and a political amalgamation comprised of six member states like Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. The union economic policies seek to enhance cooperation within the private sectors. Secondly, it also fosters scientific and technical progress in the vital industries, mining, water, agriculture and service industry and the establishment of scientific research centers. Thirdly, the organization seeks to set-up joint ventures relating to plethora of industry. This research is seconded by Al-Busaidi (10-18, 26-33) who presents a plethora of justifications seconding the above named objectives. In addition, considerate research from Ziaei (406-417) will seek to provide empirical justification in relation to this commencing research. Cevik et al. (2013) seconded by Espinoza et al. examine various macroeconomic policies which are applicable in this study.
Six key economic indicators and Main economic policies
Espinoza (4) reflects international accounts as the leading Key economic indicator in GCC countries. GCC countries financial structure applies an interest rate of equity price data. Financial integration is vital in approaching the nature of business activities in the countries. The underlying knowledge is that; that GCC countries belong to regional economic bodies; for instance, Oil Producing Economic countries OPEC. In this regard, market structure and volume of capital flows attempts to rely on an analysis of price data. In fact, through this indicator, GCC countries are in a better position for a greater financial integration. Pricing remains a fundamental consideration in GCC countries. It is through this macroeconomic tool that the GCC countries are capable of operation in desirable economic threshold. Market and volume data remain a second fundamental consideration in this study. For example, the GCC operates an open-door-policy while leading economies like the UAE remains a leading importer of the labor force.
Additionally, it is good to note that the leading product being pursued by GCC countries is Oil. However, recently, the service and manufacturing sector are gaining significant influence. As a result, international accounts present a desirable balance of trade mechanism. Madura (49) explains how exchange rates may correct a balance of trade deficit. In this case, the floating exchange rate is applied to bridge the gap between the balances of the leading exporters of a product. As a regard, it is necessary to access the balance of trade deficits that the GCC countries are inclined to comply. The economic goal of GCC organization is to ensure that net deficit is much lower as compared to net incomes. Therefore, the greater volume of foreign demand of products is vital in offsetting the domestic necessities of income. Although there is much debate revolving in GCC countries trying to justify that the exchange rates may not be an appropriate correction for a balance of trade, there is empirical evidence attempting to justify that fairer terms of trade are a key economic indicator currently being pursued by GCC country.
In GCC countries, applying tools like deflation (a stated earlier OPEC) often achieve aggregate macroeconomic threshold since countries can reduce their prices and remain competitive. However, lowering of prices does not happen in the GCC jurisdiction, but to trade happening outside the jurisdiction. Although, it is good to acknowledge that other considerations; for instance, the GATT system is a resolute strategy of minimizing the aggregate price-lowering stratagem. This year, the GCC came out broadly to institute the desired economic prices for their products. Critical concerns of their products include restating pricing of major products- Oil. In this regard, the GCC is instrumental in aiding countries to develop mechanisms to develop their currency and make it competitive.
Consumption and Investment
In GCC countries, there has been growing concern on the dwindling source of raw materials. Most GCC countries enjoy a handful of natural resources; these are the Air, the Sun, the Sea, the Sand and the Oil and its other products. However, oil seems to be most beneficial beating the rest constructively. Oil in this case, is a specialized product although its volumes are decreasing. As a result, this year GCC has advised member states to begin pursuing other alternatives. Possible alternatives include consistent investments in the manufacturing and hospitality industry. Besides, such an investment will inversely encourage the expansion of consumption patterns. In GCC countries, there has been a growing necessity to expand regional financing and consumption and other investments. The underlying reason is that in GCC countries, there are no bilateral financial flows between GCC and regional countries. In fact, almost all GCC countries export and import similar products. Therefore, the return rate on investment in relation to GCC products is naturally constrained. So in this regard, there is a need to pursue an economic indicator steered towards consumption and investments (Ilahi et al., 6).
UAE is exemplifying this persuasion by the establishment of policies, which are collectively applied by its economic jurisdiction. Some of the fundamental UAE industrial investments include hospitality, manufacturing, ICT, and financial services. These investments are meant to offset the general deficit created by the balance of trade deficits. In this regard, there is a general desire to expand remittances being offered to incoming countries. In fact, remittances are vital in aiding GCC countries on a collective growth strategy. The Net income is vital in facilitating the physical capital and the expansion of capital (financial, human and machinery) to pursue oriental objectives seeking to foster financial systems. Indeed, in countries; for instance, Saudi and UAE, there is strong justification of remittances boosting general consumption levels. Key trading patterns include the United States, European Union, China, India, and Africa. Therefore, it is better to argue that although the economy is not consumption driven, there is eminent regard seeking to foster consumption driven strategy since there is fear of key trading product dwindling from the market.
Legrenzi et al. (66) exemplifies these trading patterns and their value in offsetting GCC's consumption deficits cumulatively. With these findings, it is good to identify that GCC of recent has devised a methodology of increasing foreign consumption and rechanneling it to the net balance of domestic investments. Critical investments include real estate, tourism, banking, and capital markets. However, according to GCC indices there are considerable current accounts that should be the center of interest. In fact, economies such as Dubai (due to a bloated infrastructure) are still underperforming compared to global indices. Possibly, GCC countries and central banks have ensured a consistent investment in foreign direct reserves. In this case, foreign direct reserves are meant to minimize the consumption deficit in the countries. Most GCC economies are currently being driven by external factors; however, competition is proving challenging since there is a general growing fear on investment shift. South East Asia and Africa are proving to be future stronger investment destinations compared to UAE. This year, GCC are collectively encouraging member states to foster the spirit of domestic consumption a policy being pursued by a rivaling Chinese economy. This will not only reduce the total trade deficit in GCC countries, but as well expand the investment through macroeconomic balances of investments and consumption.
Labor Force and Demography
Goyal et al. (4) shows that local economic challenges have hampered GCC's economic prosperity. In fact, labor orientation is proving a menace and as well locking foreign direct investments. Indeed, policymakers in GCC countries cannot cast the right balance between pressures of a rapidly from a local labor force and maintaining a flexible policy is looking at techniques of hiring expatriate workers. Although this stratagem is appropriate because expatriate tend to repatriate significant amounts of resources to foreign destinations, a growing concern seeks to justify the validity of this initiative. The underlying reason is that GCC native labors are currently…