Trade openness and economic development in the UAE: an asymmetric approach
Abstract
Purpose
The purpose of this paper is to offer a review of the trade policy in the UAE. It also investigates the dynamic interaction between trade openness and GDP per capita in this emerging economy.
Design/methodology/approach
The asymmetric generalized impulse response functions and the asymmetric causality tests developed by Hatemi-J are used.
Findings
The results from asymmetric generalized impulse response functions indicate that a positive permanent shock in the trade openness results in a significant positive response in the cumulative sum of the positive component of the GDP per capita. Such a response is not found for the negative shocks in the trade openness. Furthermore, neither a positive nor a negative shock in the GPD per capita results in any significant response in the trade openness. These empirical findings are also supported by the implemented asymmetric causality tests.
Originality/value
This is the first attempt that investigates the impact of trade openness on economic performance in the UAE. Unlike previous literature on the topic, this paper allows for asymmetric impacts in the empirical model.
Keywords
Acknowledgements
This paper is funded by the UAE national fund via the UAEU-UPAR program. This support is genuinely appreciated. The authors are also indebted to Vian Taha for her research assistants.
Citation
Al-Shayeb, A. and Hatemi-J, A. (2016), "Trade openness and economic development in the UAE: an asymmetric approach", Journal of Economic Studies, Vol. 43 No. 4, pp. 587-597. https://doi.org/10.1108/JES-06-2015-0094
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited