Impact of Fluctuations in Oil Revenue on Investment in the GCC Countries

Mokhtar M. Metwally ()
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Mokhtar M. Metwally: University of Wollongong in Dubai, Postal: Blocks 5, 14 & 15, Dubai Knowledge Village, P.O. Box 20183, Dubai, U.A.E., http://www.uowdubai.ac.ae/

Economia Internazionale / International Economics, 2004, vol. 57, issue 2, 173-188

Abstract: The percentage of GDP devoted to Gross Fixed Capital Formation (GFCF) in 20002 the GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) varied from less than 12 per cent in the case of Kuwait to 25 per cent in the case of the UAE. The Government carries out a large percentage of investment in these countries. Public investment is, to a great extent, autonomous of changes in demand and interest rates and is financed from government oil revenue. On the other hand, private investment depends heavily on growth in private consumption, which is affected, greatly by growth in government expenditure in the GCC countries. This paper examines the behaviour of investment in the GCC countries and attempts to assess the impact of fluctuations in oil revenues on investment. The paper also tries to find out if there is a long-term relationship between investment and other components of aggregate demand (private consumption + public consumption + net exports) in the oil-producing members of the GCC.

JEL-codes: C51 E22 E62 Q43 (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ecoint:0136

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