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Free Trade in the Gulf Countries


The process of globalization in the modern world means the free flow of information, goods, services, workers, and customers, which results in the social and economic integration of different countries (Azoury & Bournois, 2014 ). One of the results of this process is the free trade agreements popularization. Their principal purpose is to make goods and services more mobile and achievable on markets around the whole world, which results in national and global economies improvement (Zafar, Sabri, Ilyas, Kousar, 2015). Free trade is unique for Arabic countries, because it connects them with the rest of the world, despite their historical and cultural differences. It is hard to overestimate the influence of this process on the countries’ economies and, therefore, on the quality of people’s lives. In the Gulf Cooperation Council countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), free trade has a positive impact on the national economies development and different spheres of the life of society.


The economic globalization and the free trade importance

During the past decades, the Gulf countries demonstrate significant changes in their economics. In particular, they engaged numbers of free trade agreements with both neighborhood states and international countries. It leads to the economic globalization and improvement of the region economics (Azoury & Bournois, 2014 ).

The most significant agreement for Gulf Cooperation Council (GCC) countries is the Great Arab Free Trade Area (GAFTA) – the agreement between 18 Arabic countries (Fath-Allah, 2015). The trade between GAFTA members accounts for approximately 90% of the total market income in the Arabic world. The GCC countries also have agreements with the United States, Australia (Chadee, Roxas, & Rogmans, 2014), European countries and other. According to the Fath-Allah (2015), countries, participating in many parallel agreements obtain more advantages, comparing with the states, which are enrolled in one or several ones. General profit from trading could overlap adverse effects or failures of selected agreements.

At the beginning of the globalization and free trade agreements, engagement politicians and economists express particular doubts about these agreements efficiency. It was postulated that trade liberalization might negatively affect both: countries-participants and the non-member states (Azoury & Bournois, 2014 ). According to Melina, Yang & Zanna (2014), free trade could have some adverse effects on local economies, due to the external debt. In the context of free trade, developing countries require external financing to make their products competitive on the local and global markets. It is considered that the free trade and use of foreign debt should be regulated by national policy (Zafar et al., 2015). The Gulf countries, however, demonstrate the positive effect of multi free trade agreements participation, despite the possible limitations (Fath-Allah, 2015).

The adverse effect of the free trade for local economics is the inevitable increase of import. The presence of the foreign products on local markets forces local companies to enhance their competitiveness and, therefore, to improve the goods and services quality (Zafar et al., 2015). However, a high import level puts the high pressure on national producers, and they should seek protection from the governments. Despite the free trade principles, some Gulf countries, in particular, Saudi Arabia make efforts to protect national goods producers from competitiveness with foreign products with the process of import substitution by local products (Shaw, 2013).

The social effect of the free trade

Free trade leads to the economic growth and, therefore, to the increase of people salaries. Countries-members became wealthier and could start to develop other branches of social life: medicine and healthcare, science, education, culture. Development of the GCC countries region illustrates this thesis. Therefore, it could be claimed that the globalization and free trade cause the enhancement of the quality of life in these countries (Chadee et al., 2014).

The economics of the Gulf countries is mainly based on the oil and natural gas markets and depends on global hydrocarbon price fluctuation. The local governments make efforts to develop the more stable economies (Shaw, 2013). The Gulf countries carry out the significant investments in contemporary investigations and technologies development with the purpose to be competitive on the external markets. It results not only in their local economies improvement and social benefits but also in global changes. The Gulf countries finance contemporary researches and participate in international scientific projects (Zafar et al., 2015).

Another positive effect of globalization and free trade is decreasing the level of unemployment. Development of national companies and modern investigations financing provide jobs for well-educated people. It leads to both: foreign professionals attraction and the level of the national education improvement (Shaw, 2013).

Free trade also leads to the cultural globalization. During last decades, cultural products from the West world become widespread on the East markets. Among such cultural products, food culture (fast food restaurants), intellectual properties (books, magazines, cinema, TV shows), clothes (jeans), and other goods could be named. The consequence of this process is the mutual cultural integration and exchange (Fath-Allah, 2015).


During the past half century, the Gulf Cooperation Council countries demonstrated unprecedented economic growth and social changes. The main tendency of their economic development is to engage free trade agreements between regional and international states. Their participation in the world trade and the process of globalization had a significant impact on different spheres of life, in particular, on the country wellness, people income, development of national economics, science, education, and health care. The social effect of the medical globalization results in the availability of the foreign goods and the improvement of the local products quality. Thus, it could be stated that the process of globalization, in particular, free trade plays a significant role in the Gulf countries health care.


Azoury, N., & Bournois, F. (2014). Crisis, globalization and governance: how to draw lessons? Newcastle, UK: Cambridge Scholars Publishing.

Chadee, D., Roxas, B., & Rogmans, T. (2014). Prospects and challenges of free trade agreements: Unlocking business opportunities in Gulf Co-operation Council (GCC) markets. London, UK: Palgrave Macmillan.

Fath-Allah, M. R. (2015). Trade agreements in Arab countries: What are the effects on their trade? (A gravity modeling approach). Economics, 3(11-12), 270-282.

Melina, G., Yang, S. C. S., & Zanna, L. F. (2016). Debt sustainability, public investment, and natural resources in developing countries: The DIGNAR model. Economic Modelling, 52, 630-649.

Shaw, T. M. (2013). Shifting geo-economic power of the Gulf: Oil, finance and institutions. In B. Momani & M. Legrenzi (Eds.). Farnham, UK: Ashgate Publishing.

Zafar, M., Sabri, P. S. U., Ilyas, M., & Kousar, S. (2015). The impact of trade openness and external debt on economic growth: New evidence from South Asia, East Asia and Middle East. Science International, 27(1), 509-516.

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