Analysing the comparative advantages of the international oil trade: the case of Gulf Cooperation Council

Abstract

Several studies have investigated the competitiveness with a focus placed on the Middle East, however, there are relatively few to pay attention specifically on the comparative advantages in oil trade. This paper utilizes the Balassa indices to shed light on the general tendencies and specific shifts in revealed comparative trade advantage of the Gulf Cooperation Council member states in main oil products between years 2000 and 2015. Based on our result, only four out of six GCC member states (Kuwait, Kingdom of Saudi Arabia, United Arab Emirates, Qatar) were found to possess an initial competitive status for at least one oil product. A tendency of generally diminishing comparative advantage in oil trade for the GCC group was revealed as a consequence of economic, financial, political reasons, including the aftermath of the financial crisis, regional instability, the Syrian conflict, fluctuating international oil prices.