Common Currency Benefits for GCC Countries - Essay Example

GCC Countries of Institute] GCC Countries Introduction The section of the report presents demographic findings of the survey data that has been gathered for the study. The findings have been presented based on the research objectives. The present study aims to investigate the GCCs common currency and efficiency to position in the region as a monetary union identifying exchange rates and other related factors. The data has been analysed and summarized applying statistical techniques (descriptive analysis). In addition, the relationship between the variables has been analysed using regression analysis. Demographic Findings Gender Gender   Mean 26 Median 26 Mode #N/A Standard Deviation 7.071068 Sample Variance 50 The results obtained indicate that the majority of the participants were male as 60 percent of the population was males and 40 percent female. Age Age   Mean 26 Median 26 Mode #N/A Standard Deviation 7.071068 Sample Variance 50 The age group of the participants was between 25 years and over 55 years. The findings of the study reveal that majority of the participants were between 26 to 35 years 40 percent of the population). 21 percent of the population was between the ages 36 to 45 years, 19 percent were between the age group less than 25 years and 10 percent were between the age group 46 to 55 years and over 55 years. Education Education   Mean 26 Median 26 Mode #N/A Standard Deviation 7.071068 Sample Variance 50 The qualification/ highest education of the participants was asked. The results show that most of respondents were university graduated 56 percent of them were bachelors, 12 percent PhD 15 percent were masters. However, the respondents with graduated high school were only 4 percent. Hence, it can be noted that the most of the participants were education and qualified degrees. Nationality Nationality   Mean   Median 26 Mode 26 Standard Deviation #N/A Sample Variance 7.071068 The statistical findings reveal 75 percent of the participants were UAE national, whereas on 13 percent wee gulf national and 12 percent was non-Arab national. Hence, it can be noted that the majority of the respondents were UAE nationals. Hypothesis 1 There is a positive relation between increasing oil revenues to bring new economic ideas for GCC countries to establish new currency. On the basis of the results obtained it can be majority of the respondents disagreed that he increase in the oil revenues will welcome the idea for GCC countries to have a common currency union (mean value 13). Moreover, it can be noted that the dispersion in the data was relatively low that indicates that the responses were more inclined towards disagreement of the idea. It is because the increase in the oil revenue will separately improve overall economic performance of the country due to which there is not a significant reason for the GCC countries to unite and establish common currency union. 1.The business administration in the oil revenue will welcome the idea for GCC countries to establish a common currency union.       Mean 13 Standard Error 5.212165 Median 12.5 Mode 4 Standard Deviation 10.42433 Sample Variance 108.6667 Furthermore, it was also investigated if the GCC countries are ready to establish separate currency the outcomes of the study highlights that the majority of the respondents disagreed and strongly disagreed to establish GCC currency union. However, the STD of 8.9 indicates that there has been a great dispersion in the data that means that the respondent’s opinion greatly varied to one other. It can be because of the different socio-economic background that has effected decisions of the countries to engage in GCC currency Union. 2.The GCC countries are well prepared and ready to establish a common currency union.       Mean 13 Standard Error 4.490731 Median 12.5 Mode #N/A Standard Deviation 8.981462 Sample Variance 80.66667 Hypothesis Questions The Questionnaire was designed to answer the related hypothesis. Q1. The business administration in the oil revenue will welcome the idea for GCC countries to establish a common currency union. Question 1 Mean 13 Standard Error 5.212165 Median 12.5 Mode 4 Standard Deviation 10.42433 Range 19 Minimum 4 Maximum 23 Sum 52 Count 4 Q2. The GCC countries are well prepared and ready to establish a common currency union. Question 2 Mean 13 Standard Error 4.490731 Median 12.5 Mode #N/A Standard Deviation 8.981462 Range 19 Minimum 4 Maximum 23 Sum 52 Count 4 Q3. Establishing a GCC common currency will benefit the GCC members. Question 3 Mean 13 Standard Error 4.654747 Median 13 Mode #N/A Standard Deviation 9.309493 Range 18 Minimum 4 Maximum 22 Sum 52 Count 4 Hypothesis Number 2 Foreign currencies affect GCC countries output because when the oil prices fall, the exchange rate may be affected in a negative way where its reduction may ruin the economy. H0: There is a significant impact of Foreign Currencies on the GCC Countries Outputs. H1: There is no significant impact of Foreign Currencies on the GCC Countries Outputs. The Question number 4 of the questionnaire was designed to gather the answers from the concerned respondents. Q4. Foreign currencies affect the output of GCC countries. The question was related to the affect of the foreign currencies on the output of the GCC Countries. 44.2% of the respondents Disagreed, 42.3% Strongly Disagreed whereas, 5.8% Strongly Agreed and 7.7% of the respondents Agreed on the statement. The results indicate that the members of the GCC Countries were mostly against the phenomenon that the foreign currencies have an effect on the production and outputs of the GCC Countries. Total of 86.5% of the respondents did not believe that foreign currencies have any relationship with the outputs of the GCC Countries. Question 4 Mean 13 Standard Error 5.492419 Median 13 Mode #N/A Standard Deviation 10.98484 Range 20 Minimum 3 Maximum 23 The results drawn from the analysis of the Hypothesis 2 illustrates that there is no significant impact of Foreign Currencies on the output of the GCC Countries. The null hypothesis was rejected and the alternative hypothesis was accepted. Hypothesis 3 The other Hypothesis was designed to gather the information regarding the impact of exchange rates on the economic assimilation of the GCC Countries. In having an exchange rate that is fixed in a regime, GCC countries can attain economic assimilation by focusing on oil revenue and intra-regional trade. H0: There is a significant impact of Exchange Rate on the GCC Countries Economic Assimilations. H1: There is no significant impact of Exchange Rate on the GCC Countries Economic Assimilations. The questions from 5- 13 were designed to identify the core activities of the GCC Countries and their respective effect on the economic assimilation. The first question was related to the need of developing a common currency; this strategy would result in decreasing the cost of transactions. Q5. The common currency will eliminate transaction costs of converting national currencies for the GCC members. The responses of the overall respondents identified that most of the Country members Disagreed to the question. 82.7% of the responses were negative. On the other hand, only 17.3% of the respondents believed that the common currency would lead to reducing the cost of transactions that will result is attaining Economic assimilation. Question 5 Mean 13 Standard Error 4.983305 Median 13 Mode #N/A Standard Deviation 9.966611 Range 20 Minimum 3 Maximum 23 Sum 52 Count 4 Q6. The firms in GCC will incur lower costs of production as a result of the elimination of transaction costs, making export and import markets more efficient. The question 6 was related to the lower costs spent by the GCC Countries due to the reduction of the transaction costs. The responses also showed the same result that is 82.7% of the responses neglected the reduction of costs. The respondents were satisfied with the results of the current cost structures and were not in support to introduce the common currency. The remaining 17.4% of the responses were in favour of the change, these people think that reduction in the transaction cost would lead to efficiency in the import and export market. Question 6 Mean 13 Standard Error 4.983305 Median 13 Mode #N/A Standard Deviation 9.966611 Range 20 Minimum 3 Maximum 23 Sum 52 Count 4 Q7. GCC zone multinationals will benefit from substantial economies of scale as many barriers to trade within the GCC zone are removed. The next question was asked to gather the information regarding the benefits of attaining economies to scale by the multinationals due to the reduction of the trade barriers. 84.6% of the respondents disagreed on the reduction of the barriers of trade. The respondents believed that the current businesses are working in effective and efficient ways and therefore require no more economies to scale. Question 7 Mean 13 Standard Error 5.212165 Median 12.5 Mode 4 Standard Deviation 10.42433 Range 19 Minimum 4 Maximum 23 Sum 52 Count 4 Q.8 Firms within the GCC will no longer segment markets and charge different prices in different currencies hence price stability. 80.8% of the respondents were against the price stability in the region. The current prices in the market were considered to be true and fair and therefore no improvements were required to vary the market segmentation. Question 8 Mean 13 Standard Error 4.708149 Median 13.5 Mode #N/A Standard Deviation 9.416298 Range 19 Minimum 3 Maximum 22 Sum 52 Count 4 Q9. As a result of price discrimination, competition within the GCC zone will rise. 78.8% of the respondents were not in favour of increasing the competition in the market and were satisfied with the current situation. Question 9 Mean 13 Standard Error 4.490731 Median 13.5 Mode #N/A Standard Deviation 8.981462 Range 19 Minimum 3 Maximum 22 Sum 52 Count 4 Q10. The GCC will benefit from lower inflation as a result of the implementation of tight monetary and fiscal policy. 82.7% of the respondents disagreed on the implication of the tight monetary and fiscal policy of the GCC Countries. Question 10 Mean 13 Standard Error 4.949747 Median 13.5 Mode #N/A Standard Deviation 9.899495 Range 19 Minimum 3 Maximum 22 Sum 52 Count 4 Q11. There will be exchange rate stability as a fixed exchange rate regime is adopted with currency pegged on dollar. 82.7% of the GCC Countries members Disagreed on the exchange rate stability, the respondents believed that the fixed exchange rate regime would not be favourable to the market. Question 11 Mean 13 Standard Error 4.949747 Median 12.5 Mode #N/A Standard Deviation 9.899495 Range 19 Minimum 4 Maximum 23 Sum 52 Count 4 Q12. GCC firms will enjoy reduced borrowing costs thus encouraging investment and growth. 82.7% of the respondents were not satisfied with the idea of reducing the borrowing costs. Question 12 Mean 13 Standard Error 5.049752 Median 12.5 Mode #N/A Standard Deviation 10.0995 Range 21 Minimum 3 Maximum 24 Sum 52 Count 4 Q13. The fixed exchange rate system will enable GCC countries to attain economic assimilation. The responses gathered for question 13 clearly illustrate that the GCC Countries are not in favour of the fixed exchange rate. 86.6% of the respondents were against the theme of fixing the exchange rate. Question 13 Mean 13 Standard Error 5.582711 Median 12 Mode #N/A Standard Deviation 11.16542 Range 22 Minimum 3 Maximum 25 Sum 52 Count 4 The results of the questionnaire illustrate that the Null hypothesis was rejected and the Alternative Hypothesis was accepted (i.e. There is no significant impact of Exchange Rate on the GCC Countries Economic Assimilations). The GCC Country members are satisfied with the current operations and do not support any changes. On the basis of the above discussion, it can be noted that the establishment of GCC currency still remains a debatable concerns as the GCC countries are more inclined for independent economic development. In addition, it can be noted that the formation of the different currency is not appreciated because of the prevailing socio-economic conditions of the countries that has declined the attractiveness of the opportunity. However, it can allow the currency to be more stable and significantly improve exchange rate of the currency that can benefit the GCC countries. However, the individual economic development of the countries is crucial factor to manage currency. References Creswell, J. W. (2013). Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. London: SAGE Publication. Read More