Causality between economic growth and investment in the United Arab Emirates Online publication date: Tue, 05-Jun-2018
by Salem A. Al-Jundi; Mohammed Seghir Guellil
International Journal of Economics and Business Research (IJEBR), Vol. 15, No. 4, 2018
Abstract: The study aims to work out the exact pattern of causality between economic growth rate and each of investment categories in the United Arab Emirates. Causality is examined by numerous researchers. However, few have studied the relationship between growth and investment at macroeconomic level. To the best of my knowledge no one investigates this topic in the UAE. We demonstrate long-term effects of the investment shares in non-oil gross domestic product on economic growth using cointegration and granger causality tests on time series data. The findings indicate unidirectional causality from private investment to non-oil GDP growth rate, from business investment to non-oil GDP growth rate, and from public investment to government investment. The results could be a good tool for policy priorities in which the private sector, within a dynamic open market, is the strongest engine to expand the non-oil economy, especially in the wake of the sharp decline in oil prices.
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