Chapter 3 - Pearson Learning Solutions

CHAPTER 3 • REGIONAL MARKET CHARACTERISTICS AND PREFERENTIAL TRADE AGREEMENTS 97President George W. Bush’s decision to invade Iraq and remove Saddam Hussein from power.The repercussions of America’s military action continue to be felt throughout the region. Theworld community is watching to see whether political and social reform can take root in Iraq.Exhibit 3-5: Dubai is one ofthe seven emirates thatmake up the United ArabEmirates (UAE). Comparedto its neighbors, Dubai’seconomy is relativelydiversified: It is an importantbusiness hub for themanufacturing, IT, andfinance sectors. Dubai hasalso become a populartourism destination in theregion. The global economiccrisis has had a major impacton Dubai. Following sixyears of economic growthfueled by a building boomand lavish consumerspending, real estate priceshave collapsed and majorconstruction projects havebeen canceled. Workers—many of whom areexpatriates—are losing theirjobs and visas.Source: Kamran Jebreili/AP WideWorld Photos.Cooperation Council for the Arab States of the GulfThe key regional organization is the Gulf Cooperation Council (GCC), which was established in1981 by Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (Table 3-12and Figure 3-8). These six countries hold about 45 percent of the world’s known oil reserves,but production is only about 18 percent of world oil output. Ironically, Saudi Arabia and severalother Middle Eastern countries post current-account deficits, largely because they mustimport most of the goods and services that their citizens consume. The countries are heavilydependent on oil revenues to pay for their imports; efforts toward economic diversification areunderway. For example, Saudi Arabia has developed new businesses in the petrochemical,cement, and iron industries; Bahrain is expanding its banking and insurance sectors; and theUnited Arab Emirates is focusing on information technology, media, and telecommunications. 20The organization provides a means of realizing coordination, integration, and cooperation in alleconomic, social, and cultural affairs. Gulf finance ministers drew up an economic cooperationTABLE 3-12 GCC Income and Population2006 GNI(in millions)2006 Population(in thousands)2006 GNIper Capita000200010270740623Bahrain $10,288 739 $14,370Kuwait 55,255 2,599 22,470Oman 22,994 2,546 9,070Qatar na 821 naSaudi Arabia 331,041 23,679 13,980United Arab Emirates 102,693 4,248 23,770Total/Mean GNI per capita $434,169 a 34,757 $12,777* ,a*Indicates meana Excluding QatarSource: Reprinted by permission of Warren Keegan Associates, Inc.20 Moin A. Siddiqi, “GCC: A Force to Be Reckoned With,” Middle East (December 2003).Global Marketing, Sixth Edition, by Warren J. Keegan and Mark C. Green. Copyright © 2011 by Warren J. Keegan. Published by Prentice Hall.