Foreign Trade or How Markets Work or Firm Behavior and Industry Organization
The Gulf Cooperation Council (GCC) is made up of the Arabian Peninsula which comprises the Bahrain, Kuwait, Saudi Arabia, Qatar, the Sultanate of Oman, and the United Arab Emirates, all of which are situated in the Southwestern area of the Asian continent. The GCC was founded in 1981 with an objective of promoting coordination among constituent states in all fields therefore achieving unity (EIU, 2009). The GCC economies have in the recent past been a worldwide focus in investment due to their strong infrastructural projects and thriving tourism and financial sectors, in addition to being exporters of oil and gas. The GCC investors have been noted to expand their investments to Africa, Asia and within the Gulf expanse, even as the US slowed in economic growth. The economic slowdown by the GCCs major trading partners in addition to the recent drop in oil prices has had its effects on the GCC economies.
It is expected that these economies are going to experience stronger economic growth due to the advantages they bear on their major investments. Surveys conducted by agencies such as the daily Emirates Business have predicted a hike in the prices of crude oil which is in turn going to accelerate the economic growth of the GCC states which are rich in oil. According to them, only a major decline in the prices of crude oil can invalidate the growth trend. In this point of view, a higher standard price of oil in 2010 will lead to growth in the nominal GDP all over the GCC economies (Shuchita, 2009).
It was in addition revealed that frail demand from the importing nations together with a key plunge in oil prices might negatively affect the green prospects of development in the region. A small portion of people in the survey said that they do not perceive any dip in oil prices nevertheless weak demand from importing nations can be an obstacle. Additionally four per cent of responds also said that continual crisis in the globe can derail growth and an extra four per cent believe regional political apprehension as a hindrance factor.
In the wake of the current world financial crisis, banks in the GCC see this as the right time for consolidation. The GCC banks have witnessed an expanding growth through the recent years since 2002. For instance banks in Qatar which is one major economy in the region recorded a growth of 50 (EIU, 2009). Now, banks in the Gulf region are more concerned on coping with fallout from the worldwide financial crisis and its shock on some family-owned organizations. The majority of banks that had deferred their expansion strategies are now considering mergers and acquisitions to expand their operation. The Kuwaiti banking sector for instance is potentially ready for mergers. As many of the Kuwaiti banks identitys they have simply a very limited number of fresh customers coming into the market yearly, thus they have to struggle hard to draw them.
Although mergers and acquisitions among the banks are no universal remedy, if the banks get this right they might be in a better position to claim their duty in the fresh financial order in the world. The proposed single currency for the Gulf region in the 2013, may add momentum to this shift. I this point of view, there is enormous prospective for the region and its financial institutions to play a key part in financial intermediation on a worldwide scale.
Tourism and travel in the Arabia is growing very fast. A research by Fast Future and Global Futures and Foresight has revealed that an astounding 3,630billionn is now invested in projects such as airports expansion, tours and travel, hotels, holiday projects, and other infrastructure transversely thirteen Middle East countries going up to 2020 (Blitz, 2008). In Dubai, many conferences have been held relating to the subject of hotel investment in the Arabia, and many issues have arisen that relate to manpower. High quality services have to be maintained across the area, since any compromise on this matter will be disastrous to Dubai which has been a favorite destination. This translates to investment in training manpower as well as maintaining incentives attractive enough to keep them in the face of global competition.
Millions of staff needs to be recruited into the region every year until year 2020 (Blitz, 2008). The resource team evidently requires being extensive and some are aggressively targeting other continents such as Africa and South America. The GCC is experiencing a business growth too fast to be compared to any other economy. It is however interesting to note that all GCC states are making considerable progress towards liberalizing their policies which relate to investment and economy, therefore facilitating a conducive environment for business and trade.
The GCC is expected to grow to an important economic and trading hub in the word. In 2020, the GCC is expected to be a US 2 trillion economy, getting almost one-quarter of oil supplies in the world in addition to increasing productions of petrochemicals, plastics and metals (EIU, 2009). As economic influence gradually turns towards the south and east, up-and-coming markets will become progressively more important trading partners and venture destinations. Gulf investors and supreme wealth funds are expected to expand their assets into Asia and Africa moreover the region is expected to export much of its oil to countries under industrialization.