A thesis submitted to the Council of the College of Administration and Economics – University of Karbala, which is part of the requirements for obtaining a master’s degree in economic sciences

By the student 

Muhannad Saud Aziz Mahmoud

Supervisor By

Prof. Dr. di-Tawfiq Abbas Al-Masoudi 

Abstract:

Industrial exposure is a significant issue in international trade today due to trade liberalization and economic openness to the world by many developing countries. This has allowed them to access new markets, specialize in the production of goods in which the country has a competitive advantage, improve production efficiency, attract foreign direct investment, and develop their economies. This has led to deepening economic exposure and dependence on advanced industrial countries.  The importance of the research lies in demonstrating the impact of the size of some macroeconomic variables (foreign direct investment, exchange rate, imported inflation, gross domestic product) on industrial exposure and the nature of the relationship between them in (the Kingdom of Saudi Arabia, the United Arab Emirates, the Republic of Iraq) and the extent of the ability and success of these variables in developing the industrial sector in order to reduce the industrial gap. The research aims to demonstrate the theoretical basis for the role of some macroeconomic variables in industrial exposure in the selected countries. The research is based on the hypothesis that some macroeconomic variables can play a positive role in reducing the rate of industrial exposure and decreasing the industrial gap in the selected countries if policies are followed that are capable of developing the productive sectors, especially the manufacturing industries, and achieving economic diversification through the use of modern technology and reducing the monopoly of exports in the economy. The research relied on following the descriptive method based on the inductive approach in analyzing some macroeconomic variables in industrial exposure, in addition to measuring the impact of these variables for the period (2004-2023) through the (ARDL) model according to the (Eviews12) program. The research concluded that there is a structural imbalance in the gross domestic product and the backwardness of the productive structures of the industrial sector due to its dependence on the extractive industry, especially Oil, making it subordinate to advanced industrial countries in both Saudi Arabia and Iraq, where Saudi Arabia’s average industrial exposure reached 182.52%. In Iraq, non-oil industrial exposure reached 548.49%, while in the UAE, the average industrial exposure reached 100.63%. This means that despite the UAE’s economic diversification policy, the UAE economy still suffers from industrial exposure due to the decline in industrial output from the manufacturing sector. Keywords: Gross Domestic Product, Exchange Rate, Foreign Direct Investment, Imported Inflation, Industrial Exposure.