Economic diversification and its impact on economic growth in the United Arab Emirates with reference to Iraq for the period (2003-2017)

Abstract

The concept of economic diversification is one of the modern concepts that has emerged in the economic fields in recent times. Many studies pointed to the need to apply the policies of economic diversification, especially in the countries of the nature of rent, because it has a clear impact on the sustainability and stability of economic growth and makes the economy more solid in facing external shocks. This study aims to measure and analyze the impact of economic diversification on the economic growth of selected the Arab countries (the UAE and Iraq) for the period (2003–2017(. The economic diversification was expressed according to three indicators: (the contribution of economic activities to the gross domestic product, Ratio of oil and non-oil exports to total exports Public and private sector contribution to total fixed capital formation). The above indicators were analyzed in which and which the impact of both the second and third indicators on the GDP growth rate during the study period was measured based on the modern standard methods of analyzing and testing time series. After quantitative and standard analysis of the indicators above for each country, it was noted that the UAE economy is more diversified than the Iraqi economy, where the UAE has been able to reduce dependence on the oil sector significantly through the low rates of contribution to the GDP and lower crude oil exports compared to non-oil exports. The contribution rate of the private sector in the GDP was greater than the contribution of the public sector, but in Iraq the opposite occurs as the dependence on the oil sector is still large according to all indicators studied. The study recommends the need to exploit the Iraqi oil revenues in the revitalization of other sectors, in order to diversify exports, diversify sources of income, and raise economic growth rates, and not to rely on the oil resource, as it is subject to continuous changes according to foreign policies.