Export-led growth in the UAE: multivariate causality between primary exports, manufactured exports and economic growth

The principal question that this research addresses is the validity of the Export-Led Growth hypothesis (ELG) in the United Arab Emirates (UAE) over the period 1981–2012, focusing on the causality between primary exports, manufac- tured exports and economic growth. Unit root tests are applied to examine the time- series properties of the variables, while the Johansen cointegration test is performed to confirm or not the existence of a long-run relationship between the variables. Moreover, the multivariate Granger causality test and a modified version of Wald test are applied to examine the direction of the short-run and long-run causality respectively. The cointegration analysis reveals that manufactured exports con- tribute more to economic growth than primary exports in the long-run. In addition, this research provides evidence to support a bi-directional causality between man- ufactured exports and economic growth in the short-run, while the Growth-Led Exports (GLE) hypothesis is valid in the long-run for UAE.

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