10. Macroeconomic Competitiveness of the GCC Economies

The Arab Gulf countries, states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates, are an integral part of the wider Arab regional system, and they are the most important regions in the Islamic culture, where they have huge natural resources of oil, gas, land, and different kinds of minerals. They are deeply rooted in Arabic culture and history. They are an integral part of the Muslim world as well. Yet these six Arab Gulf states decided to form their own “Gulf Cooperation Council,” GCC hereafter, in May of 1981 and were planning to get full economic integration including the monetary union by 2010. However, some obstacles arose in establishing a common currency in 2010. It is well known that the GCC countries are oil-based economies, for which oil proceeds make up a large percentage of government revenues which are the drivers of economic growth. According to the most recent data, oil output represents 48% of the GDP in Saudi Arabia, 35% in UAE, 50% in Qatar, more than 40% in Oman, and more than 50% in Kuwait. However, in Bahrain, the share of oil output decreased to be around 11% of GDP. These high ratios suggest that a change in the oil price volatility is highly pertinent to the volatility of all GCC countries and consequently their competitiveness performance.