STATA ANALYSIS TASK Harvard Case Solution & Analysis

STATA ANALYSIS TASK Case Solution

Introduction

            The task here is to analyze the production function and the total factor productivity of UAE and analyze the impact of the range of different variables such as foreign direct investment, gross fixed capital formation, composite and UAE workers on the economic growth of UAE. The analysis would be performed by formulating different regression models which are the OLS regression, fixed effect estimation and the random effect estimation models by utilizing the static and dynamic panel data for the five year period. Finally, the recommendation would be performed for the most suitable estimation model based upon the analysis of the production function of UAE.

Pooled OLS

            First of all, the Pool OLS regression model has been formulated and these models have been developed on the basis of the static and dynamic panel data one by one.If we analyze the OLD regression model which has been formulated on the basis of the static panel data,then if we look at the output of the first model then we can see that the overall model is significant as the p value is 0.000. The total number of the observations is 320 and the MSE is 0.46309. If we look at the impact of FDI on economic growth then we can see that the effect is insignificant with a p value of 0.652. This means that FDI is not playing an important role in the growth of the economy and its coefficient is also negative.

            Therefore, incentives should be introduced for foreign firms for FDI. The main current economic sectors which might attract FDI and have a positive impact on the growth of the economy are all the sectors except sector 9, 10 and 13. All the other sectors have key players for coming FDI in UAE as all have significant p values of 0.000. Also, if the FDI goes UAE, Abu Dhabi and Dubai, then the overall growth of these Emirati would increase and growth for Sharjah, Fujaira would decline. The linkages with the local firm’s emirdum1 and emirdum2 are significant with a p value of 0.000. Finally, gross fixed capital and UAE workers also have a positively significant impact upon the growth of the UAE economy as both have p values of 0.000.

            Secondly, we analyze the OLD regression model which has been formulated on the basis of the dynamic panel data then if we look at the output of the first model then we can see that the overall model is significant as the p value is 0.000. The total number of the observations is 172 and the MSE is 0.48419. This has increased as compared to the previous model. If we look at the impact of FDI on economic growth then we can see that the effect is insignificant with a p value of 0.387. This means that FDI is not playing an important role in the growth of the economy and its coefficient is also negative.

            Therefore, incentives should be introduced for foreign firms for FDI. The main current economic sectors which might attract FDI and have a positive impact on the growth of the economy are all the sectors except sector 4, 9, 12 and 13. All the other sectors have key players for coming FDI in UAE as all have significant p values of 0.000 except sector 1, 6, 9 and 10. Also, if the FDI goes UAE, Abu Dhabi and Dubai, then the overall growth of these Emirati would increase and growth for Sharjah, Fujaira would decline. The linkages with the local firm’s emirdum1 and emirdum2 are significant with a p value of 0.000. Finally, gross fixed capital and UAE workers also have a positively significant impact upon the growth of the UAE economy as both have p values of 0.000. It must be noted that the coefficients for GCF and UAE workers have both increased......................

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