Productivity Spillovers from Foreign Direct Investment in UAE's Industrial Sectors: A Time-Series Analysis

Albeik Motaz Bellah; Xiangxing Tao

doi:10.62051/ijgem.v3n3.17

Authors

Albeik Motaz Bellah
Xiangxing Tao

DOI:

https://doi.org/10.62051/ijgem.v3n3.17

Keywords:

Foreign Direct Investment (FDI), Productivity Spillovers, Industrial Sectors, United Arab Emirates (UAE)

Abstract

This study examines the productivity spillover effects of foreign direct investment (FDI) in the industrial sectors of the United Arab Emirates (UAE) using empirical data from time-series input-output tables. The analysis reveals that FDI significantly enhances productivity, particularly in high-tech and knowledge-intensive sectors, through technology transfer, knowledge spillovers, and resource integration. These sectors exhibit substantial productivity gains, while traditional, labor-intensive sectors benefit to a lesser extent. The findings underscore the importance of targeted FDI policies, investment in human capital, support for innovation and research and development (R&D), and balanced industrial development to maximize the benefits of FDI. Strengthening international cooperation with multinational enterprises is also crucial. The study validates existing theoretical frameworks on FDI's positive impact on productivity but acknowledges limitations related to data completeness and establishing causality. Future research should address these limitations by incorporating additional data sources, employing robust methodologies, and conducting more extensive longitudinal and sector-specific analyses. Overall, the study highlights the critical role of FDI in boosting the UAE's industrial productivity, providing valuable insights for policymakers to promote sustainable economic growth and development.

Downloads

Download data is not yet available.

References

Borensztein, E., De Gregorio, J., & Lee, J. W. (1998). How does foreign direct investment affect economic growth? Journal of International Economics, 45(1), 115-135.

Blomström, M., & Kokko, A. (1998). Multinational corporations and spillovers. Journal of Economic Surveys, 12(3), 247-277.

Alfaro, L., Chanda, A., Kalemli-Ozcan, S., & Sayek, S. (2004). FDI and economic growth: The role of local financial markets. Journal of International Economics, 64(1), 89-112.

Caves, R. E. (1996). Multinational enterprise and economic analysis. Cambridge University Press.

Javorcik, B. S. (2004). Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. American Economic Review, 94(3), 605-627.

Helpman, E., Melitz, M. J., & Yeaple, S. R. (2004). Export versus FDI with heterogeneous firms. American Economic Review, 94(1), 300-316.

Aitken, B. J., & Harrison, A. E. (1999). Do domestic firms benefit from direct foreign investment? Evidence from Venezuela. American Economic Review, 89(3), 605-618.

Markusen, J. R., & Venables, A. J. (1999). Foreign direct investment as a catalyst for industrial development. European Economic Review, 43(2), 335-356.

Keller, W. (2004). International technology diffusion. Journal of Economic Literature, 42(3), 752-782.

Lipsey, R. E. (2004). Home- and host-country effects of foreign direct investment. In Challenges to globalization: Analyzing the economics (pp. 333-382). University of Chicago Press.

Haddad, M., & Harrison, A. (1993). Are there positive spillovers from direct foreign investment? Evidence from panel data for Morocco. Journal of Development Economics, 42(1), 51-74.

Wang, J.-Y. (1990). Growth, technology transfer, and the long-run theory of international capital movements. Journal of International Economics, 29(3-4), 255-271.