Soaring of the Gulf Falcons: Diversification in the GCC Oil Exporters in Seven Propositions

September 24, 2014

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

A key priority for the Gulf Cooperation Council (GCC) countries is to create a dynamic non-oil tradable sector to support sustainable growth. Since export diversification takes a long time, it has to start now. We argue that the failure to diversify away from oil stems mainly from market failures rather than government failures. To tackle market failures, the government needs to change the incentive structure for workers and firms. Experiences of oil exporters that managed to diversify suggest that a focus on competing in international markets and an emphasis on technological upgrade and climbing the “quality ladder” are crucial.

Subject: Commodities, Comparative advantage, Exports, International trade, Oil, Oil prices, Oil, gas and mining taxes, Prices, Taxes

Keywords: Comparative advantage, country authorities, development, Dutch disease, export sophistication, exports, gas and mining taxes, GCC country, GCC government, Global, government failure, growth, natural resource, natural resources, North America, Oil, oil countries, oil exporter, Oil prices, state intervention, WP

Pages:
55
Volume:
2014
DOI:
https://doi.org/10.5089/9781498310642.001
Issue:
177
Series:
Working Paper No. 2014/177
Stock No:
WPIEA2014177
ISBN:
9781498310642
ISSN:
1018-5941

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