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Mutual Economic Spillover Effects between Iran and United Arab Emirates
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Ali Abdizadeh1   , Nader Mehregan2 , Seyyed Yaghoub Zeraatkish3 |
1- PhD student in Economic Sciences, Science and Research Branch, Islamic Azad University, Tehran, Iran.
2- Professor of Economics, Faculty of Economic and Social Sciences, Bu-Ali Sina University, Hamadan, Iran. , mehregannader@basu.ac.ir
3- Professor of Agricultural Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran. |
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Abstract: (55 Views) |
The aim of this study is to identify and quantify the dynamic effects of economic spillovers resulting from economic cooperation between Iran and the United Arab Emirates (UAE), with a particular emphasis on the role of economic growth over the period from 1967 to 2024. For this purpose, using the Vector Autoregression (VAR) model, the bilateral relationship between the GDP growth rates of the two countries was examined. The empirical findings indicate a unidirectional causal relationship from Iran's economic growth to that of the UAE, while the reverse causality is not confirmed. Variance decomposition shows that in the long run, about 14.35% of the fluctuations in UAE's growth are explained by shocks from Iran's economy, whereas the share of the UAE in explaining Iran's fluctuations is only about 5.78%. Moreover, more than 94% of Iran's growth fluctuations originate from endogenous and domestic factors. These findings suggest that Iran's economy plays an exogenous and leading role in this bilateral relationship; however, due to severe fluctuations, structural constraints such as sanctions, exchange rate instability, and a lack of sufficient absorptive capacity, it is unable to benefit from positive spillovers from the UAE. From a policy perspective, reducing dependence on the UAE corridor by developing alternative routes and adopting a "trade polygamy" policy instead of relying on a single main partner is recommended. Although economic cooperation between Iran and the UAE has been substantial over the past five decades, it has failed to create stable and structural linkages that could turn spillover effects into a bidirectional and synergistic process.
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Article number: 3 |
| Keywords: Regional Growth, Vector Autoregression (VAR), Economic Spillover, Iran's Economy, UAE's Economy. |
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Full-Text [PDF 1833 kb]
(67 Downloads)
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Article type: Research |
Subject:
Special
Received: 2026/03/25 | Accepted: 2026/05/17 | Published: 2026/05/31
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