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

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.

[1]  A. F. Darrat,et al.  Human capital, investment and growth: Some results from an endogenous growth model , 1994 .

[2]  Matti Pohjola,et al.  ICT as a source of output and productivity growth in Finland , 2007 .

[3]  Jess Benhabib,et al.  The role of human capital in economic development Evidence from aggregate cross-country data , 1994 .

[4]  Stephen D. Oliner,et al.  The Resurgence of Growth in the Late 1990s: Is Information Technology the Story? , 2000 .

[5]  Ali E Darrat.  Tax and Spend, or Spend and Tax? An Inquiry into the Turkish Budgetary Process , 1998 .

[6]  X. Sala-i-Martin,et al.  I Just Ran Four Million Regressions , 1997 .

[7]  E. Hargittai.  Weaving the Western Web: explaining differences in Internet connectivity among OECD countries , 1999 .

[8]  W. Easterly,et al.  It's Not Factor Accumulation: Stylized Facts and Growth Models , 2001 .

[9]  K. Kraemer,et al.  : Evidence from , 2022 .

[10]  Francis X. Diebold,et al.  Unit-Root Tests Are Useful for Selecting Forecasting Models , 1999 .

[11]  William Easterly,et al.  The elusive quest for growth: Economists''adventures and misadventures in the tropics, MIT Press, , 2001 .

[12]  Jong‐Wha Lee,et al.  Education for Technology Readiness: Prospects for Developing Countries , 2001 .

[13]  Wilbur John Coleman,et al.  Cross-Country Technology Diffusion: The Case of Computers , 2001 .

[14]  Intelligence, Human Capital, and Economic Growth: A Bayesian Averaging of Classical Estimates (Bace) Approach , 2005 .

[15]  S. Johansen,et al.  MAXIMUM LIKELIHOOD ESTIMATION AND INFERENCE ON COINTEGRATION — WITH APPLICATIONS TO THE DEMAND FOR MONEY , 2009 .

[16]  Matti Pohjola,et al.  Information Technology and Economic Growth: A Cross country Analysis , 1992 .

[17]  G. Psacharopoulos,et al.  Returns to education: a further international update and implications , 1985 .

[18]  Jesus Gonzalo,et al.  Estimation of Common Long-Memory Components in Cointegrated Systems , 1995 .

[19]  Hans-Eggert Reimers,et al.  Comparisons of tests for multivariate cointegration , 1992 .

[20]  P. Romer.  Increasing Returns and Long-Run Growth , 1986, Journal of Political Economy.

[21]  The Role of Education and Human Capital for Economic Growth in Middle Income Countries: Egypt's Case , 2006 .

[22]  Clive W. J. Granger,et al.  Developments in the study of cointegrated economic variables , 2001 .

[23]  Matti Pohjola,et al.  New Economy in Growth and Development , 2002 .

[24]  W. Easterly,et al.  What Have We Learned from a Decade of Empirical Research on Growth? It's Not Factor Accumulation: Stylized Facts and Growth Models , 2001 .

[25]  D. Acemoglu.  Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality , 1998 .

[26]  Jesus Gonzalo,et al.  Five alternative methods of estimating long-run equilibrium relationships , 1994 .

[27]  R. Solow.  A Contribution to the Theory of Economic Growth , 1956 .

[28]  G. González-Farías,et al.  A comparison of unit root test criteria , 1994 .

[29]  Seung-Hoon Yoo.  Does information technology contribute to economic growth in developing countries? a cross-country analysis , 2003 .