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August 19, 2026Journal of Financial Economic Policy

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

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Authors

SMSiham MatallahEconomic Research ForumWAWalid AbdmoulahArab Studies and Research InstituteAMAmal MatallahUniversité de ain Témouchent

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Overview

Econometric panel analysis demonstrates sovereign wealth funds drive nonhydrocarbon growth in GCC countries, indicating capital deployment requires strong domestic innovation ecosystems.

Key Points

  • To empirically evaluate the impact of sovereign wealth funds on economic diversification across GCC countries and determine how domestic innovation capacity moderates this relationship.
  • Analyzed macroeconomic and sovereign wealth fund panel data from Gulf Cooperation Council countries spanning 2008 to 2023.
  • Employed a panel autoregressive distributed lag-pooled mean group (ARDL-PMG) estimator to capture both short-run dynamics and long-run equilibrium relationships.
  • Sovereign wealth funds act as significant conduits for fostering economic expansion beyond traditional hydrocarbon-dependent sectors.
  • Domestic innovation capacity exerts a statistically significant positive moderating effect, substantially amplifying the diversification outcomes of sovereign wealth fund investments.

Cite This Study

Matallah et al. (2026) studied this question.

synapsesocial.com/papers/6a85639d03308d306e2d6ea5https://doi.org/10.1108/jfep-10-2025-0475
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