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Oil Dependence, Economic Diversification, and Economic Growth in GCC Countries: A New Composite Index and PMG–ARDL Evidence

Nermeen Ishker et al.

International Journal of Energy Economics and Policy2026https://doi.org/10.32479/ijeep.22501article
ABDC C
Weight
0.37

What the paper says

This paper constructs and applies a Composite Economic Diversification Index (CEDIX) to quantify the impact of economic diversification on economic growth in oil-dependent GCC economies during the period 2000–2022. In constructing CEDIX, the export, sectoral, and fiscal dimensions are combined by using principal component analysis. Estimation of the diversification-growth nexus was done through the PMG-ARDL specification. Furthermore, second-generation panel tests, the Pesaran CIPS unit-root test, and Westerlund's ECM cointegration test were implemented, and their results supported the long-run equilibrium of variables. Baseline controls are real Brent oil prices, investment, and labor. Results from the PMG estimation showed that diversification has a positive and statistically significant long-run effect on growth. The speed of adjustment to equilibrium is fast. As would be expected from reform gestation lags, the short-run effects of diversification remain modest, while investment and oil prices are the factors shaping the cyclical movements. A fixed-effects ECM estimated with Driscoll-Kraay standard errors was considered for robustness checking and also supports the sign and significance of our main findings. Therefore, policy should give priority to promoting non-oil exports, sectoral upgrading beyond hydrocarbon markets, and fiscal rebalancing in transforming oil windfalls into durable diversified growth.

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https://doi.org/https://doi.org/10.32479/ijeep.22501

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@article{nermeen2026,
  title        = {{Oil Dependence, Economic Diversification, and Economic Growth in GCC Countries: A New Composite Index and PMG–ARDL Evidence}},
  author       = {Nermeen Ishker et al.},
  journal      = {International Journal of Energy Economics and Policy},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.32479/ijeep.22501},
}

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Oil Dependence, Economic Diversification, and Economic Growth in GCC Countries: A New Composite Index and PMG–ARDL Evidence

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.