The Changing Pattern in International Trade and Capital Flows of the GCC Countries in Comparison with Other Oil-Exporting Countries

Abstract:     
During the past decade the GCC countries have achieved a remarkably high degree of trade and financial integration in the world economy. Before the global crisis began, they invested their abundant oil income which resulted from high energy prices and high world demand, in return abundantly abroad. Thanks to policies that are geared towards opening up borders, the GCC countries have imparted a significant stimulus to the world economy, to a much greater extent than other oil exporting countries in similar conditions. The development of the gross capital flows in view of the recent global crisis and their composition are the main focus of this study. It aims at providing a comprehensive overview of the pattern of the current and capital account of the balance of payments of the group of six GCC countries, and benchmarks this group with the other OPEC countries that have a comparable size of natural resources. Aspects of globalization, trade and financial integration, such as the dependence on oil, “Dutch disease”, regional integration, foreign direct investment and cross-border assets and loans are addressed. The impact of the crisis is found to have reverted international capital flows of the GCC, in particular cross-border bank loans and deposits.

Number of Pages in PDF File: 29

Keywords: Oil-Exporting Countries, GCC, Trade, Financial, Integration, Capital Flows

JEL Classification: F15, F32, F41

working papers series