An Interesting global economic organization to understand is the formation of the Arab States of the Gulf or the GCC, Gulf Cooperation Council. The GCC was formed in the early 21st century to address and combine the common economic concerns of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). The countries formed this economic council with several goals in mind.
The first goal of the GCC was to create full economic integration among member countries. This would create a stable macroeconomic environment making it easier for member countries to participate in the global economy. This would also help to create more stability within the Middle East and encourage more trading partners. The second goal of the GCC was to create a common currency among its members. They would establish a central monetary policy but continue to decentralize the fiscal policies of its members. This is different from the European Union members in that they have the EU as a centralized monetary and fiscal governing body. In the GCC’s plan, all member countries are independent countries each with their own checkbooks drawing from the same central bank.
The GCC faces many challenges in order to succeed. Their members primarily get their income from oil exports and with the unsettling global economy; oil prices have had massive swings. They also agreed in 2003 to peg their member country currencies to the US Dollar in preparation for a common currency. But, inflation has increased the cost of imports by as much as 15%, which really hurts the working class. The problem filters to other non GCC members like India and Pakistan because many of the working class in the GCC countries send their wages home to their families. The GCC has many more obstacles to face in order to be successful and become a player in the global economy; especially since the UAE and Oman have voted recently to abandon the common GCC currency goal.