Drivers of Labor Force Participation and Economic Growth in Gulf Cooperation Countries Region: A Dynamic Panel Analysis

This study investigates the drivers of labor force participation and GDP growth in the Gulf Cooperation Council (GCC) region from 1990 to 2023, emphasizing the roles of youth employment, urbanization, export performance, and foreign direct investment (FDI).Using the Arellano-Bond dynamic panel data estimation method, the study models interdependent relationships between labor force participation, GDP growth, and key macroeconomic indicators while addressing endogeneity and dynamic feedback effects.The analysis reveals that lagged labor force participation has a strong positive and highly significant effect (coefficient = 0.821, p < 0.001), indicating persistence in workforce engagement.Urbanization exerts a significant positive influence (coefficient = 0.271, p = 0.007), while GDP growth shows a positive but marginally significant effect (coefficient = 0.219, p = 0.076).Exports of goods and services have a negative and significant impact on labor force participation (coefficient = -0.076,p = 0.024), suggesting structural mismatches between export industries and labor market needs.ICT imports and FDI have statistically insignificant effects.Regarding GDP growth, past growth trends (p < 0.01), labor force participation, urbanization, and general exports significantly enhance economic performance.In contrast, ICT goods exports negatively correlate with GDP growth, and FDI contributes modestly but significantly.This study provides novel empirical evidence on the differential impact of macroeconomic drivers on labor force participation and growth in GCC economies, particularly highlighting the persistent influence of urbanization, the negative association of export sectors with labor absorption, and the limited role of ICT and FDI.It contributes to the literature by dissecting the sectoral misalignments in labor demand and proposing policy directions to promote inclusive growth, especially through youth integration, urban labor planning, and strategic trade and investment alignment.