Fuel-mining exports and economic growth: evidence from the UAE

This study investigates the causal relationship between fuel-mining exports and economic growth in the United Arab Emirates (UAE) over the period 1981–2012. Motivated by conflicting findings in the literature on the export-growth nexus—particularly the role of primary exports—the study employs a production function framework incorporating physical capital, human capital, fuel-mining exports, and imports. Using time-series techniques including unit root tests, Johansen cointegration, Granger causality within a vector error correction model, and Toda-Yamamoto causality tests, the analysis finds no evidence of either short-run or long-run causality from fuel-mining exports to economic growth. In contrast, the results highlight the importance of imports and physical capital in supporting growth and expanding fuel-mining exports. Long-run bi-directional causality between imports and GDP further emphasizes the growth-enhancing role of imported capital goods and technology. While fuel-mining exports are negatively associated with growth, their declining share in total exports since 1981 may signal a positive structural shift. The findings offer insights for policy formulation in the UAE and similar resource-dependent economies aiming to sustain growth through diversification and investment in capital accumulation.