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| Volume XIV, Spring 2007, Number 1 |
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ABSTRACT
The GCC and Arab Economic Inegration: A New Paradigm
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| Steffen Hertog |
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Dr. Hertog is a post-doctoral research fellow at the Princeton Environmental Institute and a lecturer in Middle East politics at Durham University, UK. He has been traveling to and working in the Gulf for the last seven years.
Two developments are currently changing the face of the Arab world. The first is the catastrophe in Iraq and the rebalancing of forces it entails. The outcome of this for the Arab world is still unclear, but the balance sheet is unlikely to be positive. The second and less salient development is the second oil boom, which is generating a new regional political economy. The contours of this new regional system have been emerging in a much clearer fashion. Yet, in the shadow of Iraq, little ink has been spilled on the fundamental economic changes in the region. This article is a first attempt to describe and systematize what is happening.
In a nutshell, the boom has been driving an unprecedented phase of economic integration in the Arab region. The term "Arab economic integration" is evocative of countless inter-governmental cooperation projects- often grandiose, almost always futile. Current developments have little to do with multilateral trade diplomacy, however. Rather, the new phase of integration is characterized by three secular shifts:
- Business is playing a more important role than government,
- Foreign direct investment (FDI) is more important than trade,
- The Gulf is the pivotal player.
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