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What Are the Potential Economic Benefits of Enlarging the Gulf Cooperation Council?
Author:
Mr. Selim A Elekdag
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https://orcid.org/0000-0002-1234-4463
,
Mr. Saade Chami
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, and
Mr. Ivan Tchakarov
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Series:
IMF Working Papers
Volume/Issue:
Volume 2004: Issue 152
Language:
English
Publication Date:
01 Aug 2004
DOI:
https://doi.org/10.5089/9781451857122.001
ISBN:
9781451857122
ISSN:
1018-5941
Pages:
33
Keywords:
WP; GCC country; GCC; labor market; regional integration; competition; IMF’s Global Economy Model (GEM); goods market; Yemeni product markets; GCC enlargement; GCC member; GCC Labor; GCC block; market power; Labor markets; Consumption; Real exchange rates; Commodity markets; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper uses a variant of the IMF's Global Economy Model (GEM) to estimate the macroeconomic effects of Yemen's full accession into the Gulf Cooperation Council (GCC). After calibrating the model to Yemen and the GCC countries, several simulations were carried out to estimate the potential impact of economic integration on both. The paper draws two fundamental conclusions. First, further steps in regional integration would enhance competition and produce large economic benefits for both Yemen and the GCC countries. In particular, we show that in some cases economic integration could increase GDP in Yemen by as much as 18 percent and in the GCC by as much as 20 percent over the long run. Second, even if market structures do not improve substantially, GCC enlargement can still generate substantial spillover gains with consumption increasing by up to 7 percent in Yemen and 8 percent in the GCC, respectively.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund