An economic analysis of potential GCC economic and monetary union for sustainable development – Drawing from the European experience, Dr. Subhadra Ganuli
Dr. Subhadra Ganuli
Associate Professor, Department of Accounting and Economics, College of Business and Finance, Ahlia University, Manama,
Kingdom of Bahrain
Purpose: Gulf Cooperation Council (GCC) has been set up in 1980s for strengthening cooperation and economic development of the region. However, the progress has been slow and the oil price plunge recently has led to concerns regarding sustainable development primarily due to the region’s dependence on oil and lack of diversification. The paper analyses the scope for Economic and Monetary Union (EMU) of the GCC in the current backdrop of oil crisis and examines potential implication of a union for sustainable development of the GCC through price transparency, free trade, movement of labour and resources.
Design/Methodology/Approach: The paper draws its theoretical and practical approach from the experience of the Economic
Union of Europe (using convergence criteria and growth and stability pact) in 1999. The paper analyses time series data of macro-economic variables (e.g. GDP, budget deficits, debt and others) for GCC during 2005–2014 from United Nations Conference on Trade and Development (UNCTAD), World Bank and International Monetary Fund (IMF) databases.
Findings: The paper concludes that GCC economies are very similar in terms of their structural and economic fundamentals. The paper shows convergence of the countries in terms of macroeconomic variables and concludes that EMU will contribute towards sustainable development of the region.
Originality/Value: The study is useful to policy makers, central banks, industry and researchers as it relates sustainable development in GCC to the EMU following the experience of the EMU.
Keywords: Economic and Monetary Union; EMU, Sustainable Development, Gulf Cooperation Council, GCC, European Union, Convergence Criteria, GDP, Debt, Budget Deficits.