The Changing Pattern in International Trade and Capital Flows of the Gulf Cooperation Council Countries in Comparison with other Oil-Exporting Countries

This study provides an overview of the pattern of the gross capital flows of the current and capital accounts of the balance of payments of the group of six Gulf Cooperation Council countries during the last decade that includes the global crisis years. As a comprehensive overview is lacking in the literature, while this country group has gained in importance in the global economy in particular in the years before the global crisis, this study tries to fill this gap. It benchmarks the GCC countries with the other oil-exporting OPEC countries that have a comparable size of natural resources. The GCC countries’ high investments in the world economy financed by their abundant income from oil revenues, showed their remarkably high degree of trade and financial integration in the world economy. Thanks to policies geared towards opening up borders, the GCC countries have imparted a significant stimulus to the world economy, to a much greater extent than other oil exporting countries in similar conditions. Aspects of globalization, trade and financial integration, such as the dependence on oil, “Dutch disease”, regional integration, foreign direct investment and cross-border assets and loans are addressed. The results show that the impact of the crisis has reverted international capital flows of the GCC, in particular cross-border bank loans, deposits and foreign direct investment. Current and future global policymaking needs however more timely and consistent statistical information.