GCC countries explore ways to boost growth

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Alively discussion developed over desirable economic and governmental reforms at a recent seminar organized by the IMF and the Arab Monetary Fund (AMF) for parliamentarians and members of consultative councils from the six countries of the Gulf Cooperation Council (GCC)- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Part of the context was the below-potential economic growth of the region and the associated stagnation of real per capita incomes in recent decades.

The 30 representatives (some elected, some appointed by governments), meeting in Abu Dhabi on December 19-20, explored strategies to accelerate growth in the region, including stepping up economic diversification, reducing the role and size of the public sector, strengthening institutions, implementing labor market reforms, and developing the financial sector. Discussions focused especially on policy areas where legislative and consultative bodies play a vital role.

Participants agreed that regional economic integration is key for development and growth.

Presenters noted that significant progress had already been achieved with the free movement of goods, services, labor, and capital, and that further inroads were being made through the gradual harmonization of banking regulation and supervision, and progress with tax harmonization.

But different regulations for foreign investment, ownership, and capital markets, and for integration with the global banking system have worked against an enlarged regional common market.

The objective of monetary union, which the GCC countries aim to meet by 2010, prompted an extensive debate.While the European Monetary Union's experience was seen as relevant, participants stressed that the GCC region differed in a number of significant ways, including in its heavy reliance on oil and limited economic diversification.

They felt that monetary union would be beneficial, as long as it was accompanied by the harmonization of regulations, greater policy...