Determinants of economic diversification in GCC countries: empirical study for the period (2000–2022)

Adnan Aljawareen

Chapter 3 in Economic Challenges in the Gulf Cooperation Council Countries, 2026, pp 41-62 from Edward Elgar Publishing

Abstract: Since the Gulf Cooperation Council (GCC) countries’ GDP is still mostly derived from the oil sector, there is an inherent correlation between the magnitude of oil income and rates of economic growth. According to World Bank estimates, this caused the GDP of the Gulf countries to decrease by roughly 4.8% in 2020 as a result of the drop in oil prices during that year and then it rose to 3.7% in 2023. This chapter analyzes the future trends of economic diversification efforts in GCC countries. The chapter, however, questions the likelihood of diversification plans being translated into action. An experimental approach is used to measure the effects of fixed capital formation, exchange rate, trade openness, and per capita GDP on economic diversification in order to determine the most significant factors influencing the level of economic diversification in the six GCC countries. Thus, there has been a major setback to the hope of diversifying economies through politically challenging economic changes. This conclusion does not, however, preclude the diversification techniques from being implemented piecemeal and on an as-needed basis in the future.

Keywords: Economic Diversification; GCC Countries; Trade Openness; Exchange Rate; Experimental Approach (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035358434
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