DYNAMICS OF EXPORTS, INFRASTRUCTURE, AND GROWTH IN GCC: VARS AND CAUSALITY TESTING

Sufian Eltayeb Mohamed

doi:10.46827/ejefr.v5i2.1143

Abstract

The paper is concerned with analyzing the dynamic effects of exports and infrastructure on GCC economic growth. Panel cointegration methodology is used to test for the existence of a long relationship between the variable. Two tests, Kao (1999) and Johansen cointegration tests are applied to check for cointegration. The results of the two tests reveal that there exists a long run co-integrating relationship between export and infrastructure proxies and economic growth in GCC countries. Additionally, fully modified least square (FMOLS) and dynamic ordinary least square (DOLS) were used to test the magnitude of the long relationship among variables. The results show that export and infrastructure variables are positive and have significant impact on the long run growth of the GCC economy. Further, fixed –effects method is selected as random effect model is rejected based on Hausman test result. The results of fixed effect show that export and infrastructure variables ate positive and statistically significant. With regard to policy, variable mixed results were obtained. As a policy recommendation the study, suggest that proper absorptive capacity such as deep financial institution, good infrastructure quality and supplementing public expenditures should be met in order to maximize the benefits of exports.  JEL: C33; O11; F10; O19; O47  Article visualizations:<img src="/-counters-/edu_01/0875/a.php" alt="Hit counter" />

Highlights

IntroductionSufian Eltayeb Mohamed DYNAMICS OF EXPORTS, INFRASTRUCTURE, AND GROWTH IN GCC: VARS AND CAUSALITY TESTING the infrastructure sector because they believe that this sector will boost their economic growth and help them to be competitive in the international markets
The analysis shows that there is unidirectional causality running from the interaction term of export to real growth rate
By employing a panel data methodology for the period of 1990–2019 the study investigates whether the export and infrastructure have a positive effect on GCC countries

Summary

Introduction

Sufian Eltayeb Mohamed DYNAMICS OF EXPORTS, INFRASTRUCTURE, AND GROWTH IN GCC: VARS AND CAUSALITY TESTING the infrastructure sector because they believe that this sector will boost their economic growth and help them to be competitive in the international markets. This believe is supported by many empirical studies that demonstrates the positive impact of infrastructure on economic growth and unveil that transport plays a vital role in economic activity either directly or as a complement to other factors of production. This paper examines the dynamic relationship between export, infrastructure on economic growth of GGC

Objectives

Results

Conclusion