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Further Evidence on Export-Led Growth in the United Arab Emirates: Are Non-Oil Exports or Re-Exports the Key to Economic Growth?

Author

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  • Kalaitzi Athanasia S.

    (Middle East Centre, London School of Economics and Political Science, Room PAN.10.01, Pankhurst House, Clement’s Inn, LondonWC2A 2AZ, UK)

  • Chamberlain Trevor W.

    (DeGroote School of Business, McMaster University, 1280 Main Street West, Hamilton, OntarioL8S 4M4, Canada)

Abstract

This study investigates the relationships between exports and economic growth in the United Arab Emirates. Understanding these relationships is important for purposes of establishing appropriate growth and development policies and strategies. The study uses an augmented Cobb–Douglas production function to examine the causality between non-oil exports, re-exports and economic growth over the period 1981–2012. To investigate the existence of a long-run relationship between the variables, the study performs the Johansen cointegration test, while the direction of the short-run causality is examined by applying the Granger causality test in a vector error correction model framework. A modified Wald test in an augmented vector autoregressive model is applied in order to find the direction of the long-run causality. This research provides evidence in support of an indirect short-run uni-directional causality from economic growth to re-exports, through physical capital accumulation and imports. As for long-run causality, the results show that a bi-directional causality exists between re-exports and economic growth in the UAE.

Suggested Citation

  • Kalaitzi Athanasia S. & Chamberlain Trevor W., 2019. "Further Evidence on Export-Led Growth in the United Arab Emirates: Are Non-Oil Exports or Re-Exports the Key to Economic Growth?," Review of Middle East Economics and Finance, De Gruyter, vol. 15(2), pages 1-15, August.
    • Handle: RePEc:bpj:rmeecf:v:15:y:2019:i:2:p:15:n:2
    DOI: 10.1515/rmeef-2019-0007
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    More about this item

    Keywords

    diversification; re-exports; economic growth; causality; UAE;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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