The nexus between export diversification, imports, capital and economic growth in the United Arab Emirates: An empirical investigation

Saima Shadab and Aviral Tiwari

Cogent Economics & Finance, 2021, vol. 9, issue 1, 1914396

Abstract: Using the Vector Error Correction Model (VECM) and Toda-Yamamoto Causality approach, this paper investigates the short-run and long–run relationship between export diversification, physical and human capital, imports, and economic growth in the UAE. The study period in consideration is 1975-2017. The findings obtained from the VECM test confirm the existence of a significant long-run relationship between export diversification, imports, and economic growth in the UAE. Besides, the Toda Yamamoto Granger Causality test results reveal that imports Granger-cause UAE’s economic growth which proves the validity of the Import-Led Growth hypothesis for the UAE economy in the long-run. The results also confirm that a unidirectional causal relationship exists from export diversification to economic growth for the UAE. This finding indicates the success of the UAE economy in attaining economic diversification and reduction in oil–dependency.

Date: 2021
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DOI: 10.1080/23322039.2021.1914396

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