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

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.