This paper aims to examine the relationship between trade and economic growth using data of UAE economy for the period of 1974-2011.
The bounds testing is applied for testing the cointegration relationship between the variables. The rolling window approach has been used to analyze the stability of long run coefficients.
The empirical analysis shows the presence of cointegration between trade and economic growth. Furthermore, exports have positive, but imports have negative effect on economic growth. The rolling window approach confirms the stability of long-run estimates.
This paper provides new insights for policymakers to use trade as economic tool for sustainable economic development.
This paper makes a unique contribution to the literature with reference to UAE, being a pioneering attempt to investigate the relationship between trade and economic growth by using long time series data and applying more rigorous techniques like time varying rolling window analysis.
