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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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The Macroeconomic Impact of Migration

The Macroeconomic Impact of Migration

(p.40) 3 The Macroeconomic Impact of Migration
The Macroeconomics of the Arab States of the Gulf

Raphael Espinoza

Ghada Fayad

Ananthakrishnan Prasad

Oxford University Press

GCC countries have been witnessing massive influxes of foreign labor since the dramatic increase in oil prices in the 1970s, placing them as the third region of immigration after North America and the European Union by 2010. This remains true despite recent efforts at labor force nationalization that aimed at limiting the supply of foreign workers and increasing the demand for nationals in the private sector. Reflecting the pattern of migrants and their high propensity to remit, remittances from the GCC in 2009 amounted to about 20 percent of world remittance outflows. This chapter shows, theoretically and empirically, that large scale immigration to the GCC have helped the region avoid one the main elements of the ‘Resource Curse’: the ‘Dutch disease’ effect of large oil windfalls inflicting risks of real exchange rate appreciation and a resulting undermining of the competitiveness of the non-oil export sector, a key sector for growth take-off.

Keywords:   immigration, remittances, dutch disease, diversification, dynamic heterogeneous panel

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