The long road ahead: sovereign wealth funds and the challenge of economic diversification in the GCC countries

Résumé fourni par la source

Purpose This study aims to empirically investigate the transformative role of sovereign wealth funds (SWFs) in advancing economic diversification within the Gulf Cooperation Council (GCC) countries. By estimating the interaction effect between SWFs and innovation, the authors seek to determine the extent to which the latter amplifies the former’s transformative impact on nonhydrocarbon sectors. This approach endeavors to quantify how the synergistic interplay between SWFs and innovation capacity potentiates optimal diversification outcomes, particularly within Gulf economies pursuing knowledge-intensive transformation under national visions (e.g. Saudi Vision 2030 and UAE Centennial 2071). Design/methodology/approach This study analyzes the contribution of SWFs to economic diversification in the GCC countries over the period 2008–2023. Methodologically, it uses a panel autoregressive distributed lag-pooled mean group estimator, which is uniquely suited to disentangle short-run dynamics from long-run equilibrium relationships in heterogeneous panels with mixed orders of integration. Furthermore, it rigorously examines the moderating role of innovation in potentiating SWFs’ efficacy as catalysts for economic diversification in the GCC countries. Findings The analysis empirically establishes SWFs as crucial conduits for venturing beyond an oil-based paradigm. However, their efficacy is by no means unconditional. The research uncovers a critical finding that innovation capacity exerts a statistically significant moderating influence, dynamically amplifying the SWFs’ impact on nonhydrocarbon sectors. This indicates that capital deployment achieves its fullest potential only when synergized with robust domestic innovation ecosystems. Originality/value Studies directly investigating the role of SWFs in fostering economic diversification within the GCC context remain strikingly scarce, virtually countable on the fingers of one hand – a lacuna our paper is expressly designed to redress. This study establishes an empirical foundation for scholarly inquiry into the synergistic nexus between SWFs and economic diversification in the GCC countries. Its principal originality lies in rigorously identifying innovation capacity as a critical moderator, a nuanced finding that reorients policy beyond mere capital allocation toward an integrated financial and technological strategy for a postoil future.

Ce résumé expose les affirmations des auteurs. BNTIC ne l’interprète pas comme une validation indépendante des résultats.