Export and Economic Growth Nexus in the GCC Countries: A panel Data Approach

Abstract

The export and economic growth nexus, which is called Balassa’s Export-Led Growth Hypothesis (ELGH) in the literature, is still an unstill issue in both the theoretical and empirical literature. In the present study, the effect of export on economic growth in oil exporting developing countries, namely, Bahrain, Saudi Arabia, Qatar, Kuwait, UAE, and Oman in the 1990–2014 period was tested based on three models, pooled ordinary least squares (POLS), fixed effects model (FEM), and random effects model (REM) via panel data analysis . The findings revealed strong support for the “export-led growth” hypothesis. In addition, our results show that apart from growth in the labor force, investments in capital formation are necessary for economic growth. According to the obtained results, the ability to adopt technological changes in order to increase efficiency, and sustain economic development is also important.