Exports and economic growth: some evidence from the GCC

This study examines the validity of the Export-Led Growth (ELG) hypothesis in five Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Saudi Arabia, and the United Arab Emirates—over the period 1975–2016. While prior research offers mixed findings on the export-growth nexus, this paper focuses on resource-rich economies that have relied heavily on natural resource exports for growth. Using cointegration analysis and Granger causality tests within a vector autoregressive framework, the study assesses both short- and long-run causal relationships between exports and economic growth, controlling for physical and human capital and imports. The results indicate short-run causality from exports to growth in Kuwait and the UAE, and from growth to exports in Bahrain and Kuwait, suggesting bi-directional causality for Kuwait. In the long run, only Bahrain shows evidence supporting the ELG hypothesis, while Kuwait and Saudi Arabia exhibit reverse causality from growth to exports. The findings highlight the complexity of the export-growth relationship in the GCC context and have important implications for designing policies that support economic diversification and sustainable development in line with the 2030 Agenda.

Copyright: The Author(s) 2020
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