An Investigation of the Long-run Dynamic Interrelationship of GDP, Production Sectors and FDI in the UAE

This paper examines a 238 cointegrated stationary observation for the United Arab Emirates (UAE) over the period 1978-2011. It employs a restricted Vector Autoregressive (VAR) model, and the estimation method is based on seemingly unrelated regression (SUR) model for a complete system of equations. The empirical results reveal that the agriculture sector has a negative interrelationship with FDI and GDP. While the industrial sector achieved a positive linkage with agriculture, export and service sectors. Furthermore, the FDI inflows have led to reduced levels of imports.