The paper examines sector specific characteristics to analyse the factors affecting the sustainability of the economies of Dubai and rest of the United Arab Emirates (UAE).
The study applies system design to analyse the research questions. Consequently, Zellnerβs seemingly unrelated regressions (SURE) technique is used to examine the relative contribution of sectors to the economies Dubai, as an individual Emirate, and the rest of UAE as a group of Emirates using time series sectoral level data for 2001β2015.
The study shows that there exists positive interdependencies between Dubai and rest of UAE economies. This signifies that the core competencies across various sectors in Dubai and rest of UAE economies need to be promoted further to have overall diversified impact on UAE economy.
The positive sizable impact of the finance sector in Dubai and negative sizable impact in the rest of the UAE provide many opportunities for designing diversification programs for sustained economic development of the entire UAE economy. The small sample size, non-availability of detailed sectoral data in four of the seven emirates constrained the scope of the study for generalization to other economies in the middle east.
The study findings are very crucial for identifying structural reforms, to strengthen competitiveness and accelerate private sector-led job creation for nationals, potential on further opening up foreign direct investment (FDI), improving selected areas of the business environment, and easing access to finance for start-ups and SMEs in both the economies.
There are very few studies, which have researched the sector specific characteristics to explain the factors affecting the sustainability of the economies of Dubai and the rest of UAE. The study provides insights to the UAE policy makers, for enhancement of policies through development of the key sectors that influence the performance of the two economies. Despite being independent entities though, the seven emirates of the UAE are economically interdependent. Studies on such interactions add unique value to the literature.
Keywords: SURE, GDP, Dubai, UAE, Sectoral Evaluation, Financial development