The effect of oil prices on the economic diversification process: Evidence from the GCC countries

We investigate the Granger non-causality relationship between oil prices and the economic diversification process in the GCC countries during the period 1989-2017. This paper uses Pedroni's (2004) panel cointegration tests and the panel non-causality test of Dumitrescu-Hurlin (2012). We find that oil price changes Granger cause the movements in the diversification progression. It indicates that economic diversification of the GCC countries is not a priority to the GCC governments because their role is changing. As a result, the GCC countries should give priority to economic diversification if it is a strategic plan for their economies.