Governing markets in Gulf States

Gulf states have altered the institutions of market governance as part of new strategies to develop their domestic markets and attract outside investment. In a sharp break from traditional institutions, several states have created new sectoral independent regulatory agencies (IRAs) in key sectors. The paper examines when, how and why these agencies have been created in two economically and politically strategic sectors - stock exchanges for company securities trading and telecommunications - that lie at the heart of new economic strategies. It argues that an analytical framework based on internationalization best explains the pattern of partial adoption of IRAs in Gulf Cooperation Council (GCC) states. International factors have provided crucial impetus for reform. The desire to attract non-Gulf capital and expertise has provided a rationale for IRAs; overseas reforms have offered examples to be copied or at least modelled; the recommendations of international organizations and free trade agreements have aided in legitimating reforms. But the impact of international factors has been mediated by domestic conditions, including the extent of oil wealth and the position and strategies of national policymakers. As a result, the spread of IRAs varies significantly among GCC states.