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The Macroeconomics of the Arab States of the Gulf$
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Raphael Espinoza, Ghada Fayad, and Ananthakrishnan Prasad

Print publication date: 2013

Print ISBN-13: 9780199683796

Published to Oxford Scholarship Online: January 2014

DOI: 10.1093/acprof:oso/9780199683796.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 30 November 2020

The Determinants of Long-Term Growth in the GCC Countries

The Determinants of Long-Term Growth in the GCC Countries

Chapter:
(p.13) 2 The Determinants of Long-Term Growth in the GCC Countries
Source:
The Macroeconomics of the Arab States of the Gulf
Author(s):

Raphael Espinoza

Ghada Fayad

Ananthakrishnan Prasad

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199683796.003.0002

GDP growth in the GCC has been considerably higher than in advanced economies and other oil exporters outside the region since 1986. The chapter shows that the GCC countries have swiftly accumulated large stocks of physical capital but the population increase and the shift away from oil meant that capital intensity remained roughly constant or even decreased. A growth accounting exercise also suggests that total factor productivity growth has been disappointing. One potential explanation is that the kind of capital that has been accumulated in the region (aircraft, computer equipment, electrical equipment) is not fully productive because the labor force is not educated enough. The paper also discusses the lessons from the empirical growth literature for the GCC. The poor quality of institutions and the large size of government consumption, both of which are possible symptoms of a resource curse, could explain the disappointing TFP growth.

Keywords:   gulf cooperation council, resource curse, growth accounting, institutions and growth

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