The UAE growth surge: have information technology and human capital contributed?

Abstract

Purpose

The purpose of this paper is to examine the extent to which information technology (IT) and human capital accumulation have contributed to the recent rapid economic growth of the United Arab Emirates (UAE).

Design/methodology/approach

Well‐established prior theories suggest that both factors are key growth ingredients. Results from cointegration tests confirm these prior theories and support a strong long‐run (equilibrium) relationship linking real economic growth in the UAE with both IT (alternatively defined) and human capital. However, additional tests based on the Gonzalo and Granger technique reveal that human capital plays a particularly significant role in the growth process.

Findings

These results lend support to the notion that good education is a prerequisite before new technologies can produce economic benefits. In contrast with robust long‐run effects, results from error‐correction models indicate that neither IT nor human capital has any significant short‐run effect on real growth.

Originality/value

The paper is of value by demonstrating that efforts to invigorate the education system and the technological infrastructure in the UAE must persist over a long period of time, before they can produce their expected economic benefits.

Citation

Al‐Khateeb, F.B., Darrat, A.F. and Elkhal, K. (2007), "The UAE growth surge: have information technology and human capital contributed?", Studies in Economics and Finance, Vol. 24 No. 4, pp. 297-306. https://doi.org/10.1108/10867370710831846