The Impact of Oil Revenue Volatility on Macroeconomic Stability in Arab Countries: A Study of the Effectiveness of Structural Diversification Channels

Abstract

Abstract:
Reliance on oil as a major source of income, with its prices linked to global markets, exposes oil-dependent economies to sharp fluctuations from time to time, thereby threatening the stability and security of the Gulf economy. This situation necessitates the adoption of a sustainable strategy for economic growth based on diversified, sustainable, and continuous sources of income and foreign currency, while promoting the diversification of domestic output and the creation of added value. In this context, the Gulf countries, like other oil-exporting rentier economies, have pursued economic diversification policies aimed at restructuring the Gulf economy by involving alternative economic sectors in the development process. This study examines the challenges facing the Gulf economies between their rentier structure and efforts to diversify economic activity, focusing on the effectiveness of economic diversification policies in moving Gulf economies toward a more diversified and sustainable economic structure while reducing the effects of the Dutch disease.