ABSTRACT
The heavy dependence on trade of the Gulf economies has always served as a driver of some economic integration. However, progress has for decades been complicated by the similar economic profiles of the Gulf economies – a systemic reliance on hydrocarbons exports in combination with a heavy import dependence. Economic diversification has facilitated the emergence of regional markets, most notably in various services, but much more can be done to develop intra-regional value chains. Structured economic integration in the region was initially championed by the Arab League but to limited effect. Interest in coordination within the Gulf grew during the 1970s’ oil boom when it was seen as a way of overcoming the limitations of small national markets. The Gulf Cooperation Council was established in 1981 amid major regional security risks. However, progress was dramatically complicated by the oil price downturn in the 1980s and 1990s, which prioritized national considerations. Renewed progress has materialized in the 21st century, albeit repeatedly challenged by intra-regional disputes and capacity duplication. However, there is a growing awareness of the value of a more regional focus in an uncertain world. Much can be achieved through intra-industry trade and corporate consolidation, whether in the Gulf or even in the broader Middle East region.
