The Impact of Free Trade Agreements on the Growth of Omani Manufacturing Sector

The proposed study aims to contribute to the realization of Oman?s Vision 2040, by developing an advanced framework (model) for free trade agreement (FTAs) to enable the Sultanate to diversify its economy and generate employment and revenues. This study examines the impact of FTAs on the productivity and exporting capacity, whereby Omani manufacturing firms can compete in and export their products to international markets. It conducts its analysis by surveying and evaluating the five FTAs that Oman concluded with the USA, the Singapore, the GCC, the GAFTA and the EFTA on the nation?s economic development, then developing a conceptual framework, in line with the principles of the new generation of FTAs and GCC specificity, to provide an impact assessment of the potential EU-GCC FTA (negotiations were suspended in 2009) and UK-Oman FTA on the productivity and export capacity of Omani manufacturing firms. The empirical part of the study is applied on the manufacturing sector that has the potential and capacity to become the engine of growth and lead on the development process. The study uses a number of theoretical underpinnings and methodological techniques, including survey questionnaires, semi-structured interviews, and simulation with Global Trade Analysis Project (GTAP), which is a computable general equilibrium (CGE) software, to disentangle the relationship between FTAs, sector-level growth and firm-level productivity and export capacity. Then, it determines the dynamic effects of trade through various channels such as competition and imported cheap intermediate inputs in production, on these variables. The findings will reaffirm the vital role of trade in knowledge and technology transfer that are essential ingredients in upgrading Oman?s industrial sector. This study will not only provide guiding principles for Omani policy makers to seek new criteria when resuming negotiations with their EU counterparts, but it will also enable them to set a new barometer when concluding new FTAs with China and the UK post-Brexit in order to maximize gains and minimalize any negative externalities of FTAs on the national economy.