The Middle East's Relations with Asia and Russia

By Hannah Carter; Anoushiravan Ehteshami | Go to book overview
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6

Economic relations between the GCC and South and South East Asia

Rodney Wilson

Trade and movements of people, and to a lesser extent investment flows, between the Gulf Arab states and South and South East Asia have become increasingly significant since the 1970s. The relation is asymmetric in the sense that there has been more dependence of South Asia, and to a lesser extent South East Asia, on the Gulf Arab economies than vice versa, the dependence mainly involving oil and remittances from migrant workers.

It is of course misleading to generalise about relationships between vast geographical regions. Here the focus is on the Gulf Cooperation Council (GCC) economies - Saudi Arabia and its five smaller Gulf Arab partners, South Asia, comprising India, Pakistan and Bangladesh, and ASEAN, the Association of South East Asian Nations, where Malaysia with its Muslim majority, and perhaps surprisingly the largely Christian Philippines, have perhaps the most intensive economic relations with the GCC.

The economic links across the Indian Ocean will undoubtedly increase as the global order changes, but much will be dependent on developments in the Indian sub-continent and ASEAN regions. For these countries the GCC, despite its limited population size of around 30 million, is an open and attractive market. At present, however, the Indian sub-continent has relatively little to offer the GCC in exchange for its oil, apart from migrant labour, which may have a limited future as the pressures build for the private sector in the Gulf to employ local nationals. ASEAN countries can offer the GCC goods produced by the subsidiaries of Japanese multinationals, but this typifies the dependence of both the Gulf and the Indian Ocean countries on economies external to the region.

Since the pace of economic change in India has been much slower than in China, all that can be envisaged is the latter replacing Japan and the European Union, and perhaps ultimately the United States, as the dominant force ultimately shaping the economic future of the Indian Ocean region including the GCC. India is the natural hub of the region, but in the twentieth century its role was well below its economic potential. Whether this will remain the case for the twenty-first century remains to be seen.

The determinants of trade are largely market driven, oil and gas exports from the GCC to the Indian sub-continent being explained in terms of vent

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