Export and Economic Growth Nexus in the GCC Countries: A panel Data Approach

Hatem Hatef Abdulkadhim,Sazan Taher Saeed

doi:10.18533/ijbsr.v7i12.1084

Hatem Hatef Abdulkadhim, Sazan Taher Saeed

Open Access

https://doi.org/10.18533/ijbsr.v7i12.1084

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Abstract

The export and economic growth nexus, which is called Balassa’s Export-Led Growth Hypothesis (ELGH) in the literature, is still an unstill issue in both the theoretical and empirical literature. In the present study, the effect of export on economic growth in oil exporting developing countries, namely, Bahrain, Saudi Arabia, Qatar, Kuwait, UAE, and Oman in the 1990–2014 period was tested based on three models, pooled ordinary least squares (POLS), fixed effects model (FEM), and random effects model (REM) via panel data analysis . The findings revealed strong support for the “export-led growth” hypothesis. In addition, our results show that apart from growth in the labor force, investments in capital formation are necessary for economic growth. According to the obtained results, the ability to adopt technological changes in order to increase efficiency, and sustain economic development is also important.

Highlights

1.0 Introduction The issue of accelerating and sustaining economic growth has been the main agenda in economic policy formulation for most of developing countries.The importance of economic growth comes from the fact that the country's population is increasing and a certain amount of GDP growth must be achieved to ensure an acceptable standard of living
Despite the ability of the neoclassical theories to predict how to achieve high rates of economic growth, but it could not find an explanation for the difference in the rates of growth achieved between the nations
5.0 Conclusion This study investigates the role of exports in the economic growth of the GCC countries, namely, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE.Based on the nature of the data used, traditional panel estimation techniques encompassing fixed effects and random effects, as well as the pooled ordinary least squares are employed, in which the results of LM and Hausman's tests show that the fixed effects model is superior over both the pooled OLS and the random-effect estimator

Summary

Introduction

The issue of accelerating and sustaining economic growth has been the main agenda in economic policy formulation for most of developing countries.The importance of economic growth comes from the fact that the country's population is increasing and a certain amount of GDP growth must be achieved to ensure an acceptable standard of living. The GCC countries have given special attention to this issue, given their reliance on its economic development on exhausted resources. Recognizing this fact, it is important to develop other sectors to replace the declining oil and gas sector. In the1950s and 1960s, neoclassical growth theoriesinfluenced by (Solow, 1956) and (Swan, 1956) identified three main causes of growth: labor, capital, and technological change (Stern, 1991). Despite the ability of the neoclassical theories to predict how to achieve high rates of economic growth, but it could not find an explanation for the difference in the rates of growth achieved between the nations

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