United Arab Emirates (UAE) has transformed into a regional trading hub of the Middle-East and is on a road to becoming a trading center of the world. It has grown into a business capital and is recognized as the wealthiest in the region with the GDP per capitaincome of $49500. UAE has managed to gain this position due to its enormous gas and oil reserves since UAE has the third largest gas and oil reserves of the OPEC. Previously, the UAE was highly dependent on oil and natural gas as it comprised 40% of total exports and 38% of GDP. However, efforts are being made to diversify the economy and reduce the dependency on oil revenues by investing in tourism, financial, and construction sectors. The diversification ofthe economy is rapidly becoming a success story and a role model for others to follow.
The UAE had a different medium for economic growth throughout the years. Until the 1930s, pearl fishing proved profitable but after the Great Depression and the invention of cultured pearls in Japan caused the Emirates’ pearl business to collapse. In the 1960s, oil replaced pearls as the medium of economic growth. The oil proved to be highly profitable and it altered the dynamics of the country and transformed it into one of the richest states in the world. Oil production attracted foreign investments and trade and allowed the UAE to fund the development of other sectors such as cement plants, food industry, and tourism.
Sheikh Mohammed bin Rashid al- Maktoum succeeded in 2006 with a vision in his mind which later changed the image of the UAE in the world. He is credited with the rapid economic expansion of Dubai in particular. In 2010 he launched the UAE vision of 2021 intending to make the UAE ‘one of the best countries in the world’ by 2021. He launched a number of major enterprises such as Emirates Airline, Jumeriah group, and DP world. His economic vision led to Dubai becoming a global city with free economic zones, technology parks, International Finance Centre, the Palm islands and the Burj Al Arab hotel. In 2016, the government announced a long-term planned to multi-diversify the economy of the UAE to attract businesses and investments in other sectors like knowledge-based industries than oil to reduce the dependency on the energy sector as a source of economic activity.
UAE VISION 2021
The UAE vision of 2021 is to be ‘one of the best countries in the world’ by 2021. Their aim is to be united in the notion of knowledge, prosperity, destiny and responsibility. The government of UAE has announced a plan through which they will introduce high quality global standard infrastructure, government services and recreational environments.This will help promote a business environment and lure foreign investments in the country.
Since the economy of the UAE is centered on international trade and financial services; it offers favorable tax conditions which have made UAE into a ‘tax haven’. The favorable tax condition is a result of the domination of the extractive sector, and a minimal bureaucratic burden which has made the running of businesses easier. This environment has fostered considerable foreign capital and investments from all over the world.
In order to implement this vision, the government put forward the strategy that would act as a benchmark for the federal entities to develop their strategic plans. The strategy was divided into 7 general principles. These are the following principles:-
- To enhance the role of national entities in carrying out operative regulations and cohesive policies by successful planning and implementation.
- To strengthen coordination and cooperation among national entities and the local government.
- To focus primarily on delivering high class, customer based and integrated government services.
- To invest in human resource sector and create new leaders.
- To promote efficient resource management within the national entities and facilitate partnerships.
- To create a strategic culture to promote uninterrupted performance improvement and produce excellent results
- To ensure transparence in order to enhance the accountability mechanisms of the government throughout the federal entities.
These steps have encouraged the change in the economic environment of the UAE and have facilitated the growth of UAE into the second largest economy in the Arab gulf with the fastest expanding economies of the world. In the past 40 years, UAE’s GDP has increased exponentially from $6.5 billion in 1971 to a whopping amount of $1248 billion in 2011. It accounted for 192x increase in Dubai’s GDP per capita which has increased from 100,000 dirhams (1975) to 174,000 dirhams (2011). This excellent success prompted international organizations, to name Dubai along with China, Turkey, India, Singapore, Russia, Malaysia and Brazil, among the world’s top emerging markets.
According to local and international estimates, steady economic growth has not resulted solely from energy output and oil exports, it has resulted from diversifying income streams and reducing oil dependence. Moreover, according to recent oil contribution figures, GDP has fallen from 70% in 1971 to 29% in 2010. This approach portrays the country’s significant economic achievement as it highlights a big contribution to the national economy’s stability. The recent report published by IMF shows that GDP growth of UAE will raise from 3.3% in 2011 to 3.8% in 2012.
To further capitalize the environment of UAE, the government made the protection of environment a priority of its government developmental strategy. Agriculture was also extensively discussed by the UAE government, and given the question of scarcity and desertification the government was successful in achieving goals. The key target for agriculture sector development and growth was the provision of food to the local economy. It is because the government finds it an aspect of national security. Similarly, the industrial sector has boomed considerably in the recent years with investments in this sector in 2010 amounting to DH101.12 billion (IMF). Nearly 4960 industries have been developed which created employment opportunities for the youth. It clearly demonstrates the federal and local government’s vision of improving and expanding the Industrial market.
UAE has managed to create a modern infrastructure which meets the requirements of the business world and their people likewise. The infrastructure includes not only highways, power and bridges but also transcends open, specialized and economic zones. The free zones are more than 30 in size, and are widely spread across the emirates. .The Abu Dhabi and Dubai real estate industry significantly contributed to the country’s transformation. In these states, the real estate has been referred to as the world-renowned with its contemporary concepts and designs.
Over the years even, the tourism sector has grown tremendously. In 2010, the number of tourist visiting reached over a 10 million. The influx of private and foreign investments has contributed majorly to the development of the tourist sector. In the last 10 years, 47 billion dirhams investment went into the tourism sector. A report published by IMF in 201, ranked the Dubai airport as the fourth best Airport in the world.
Moving towards the foreign trade, it accounts for 70% of UAE’s GDP. The country has a broad network of trading partners all over the world and they all enjoy bilateral trade relations. International trade is expected to rise by more than 25 per cent after 2011, due to significant changes in the UAE’s (Trade) economic climate. The UAE is among the world’s biggest exporters and importers with $235 billion in exports and $170 billion in imports. The exports contribute to 2% of the total world exports while the imports accounts for 1.4% of the total world imports.
Furthermore, the financial services sector of UAE has seen rapid growth as well. This was facilitated by the commercial and specialized banks of the UAE which played an important role in sponsoring economic activity and commerce in the country. There are 51 banks in the country including 23 national banks. Another contributing factor is the establishment of the financialmarketswhich havemobilized domestic savings. The Dubai Internationalfinancial market has become a free economic zones for the markets in the Middle East.
Another important step taken by the government was the e-government project. It was an attempt to promote electronic payment method for accessing federal government services. This encourages the local level entities to start e-services as well which proved to be time efficient andcost efficient.The e-government strategy helped maximize the efficiency of the UAE by the provision of world class practices in all the areas of E-government. The strategic plan was further sub-divided into 3 parts: E-services, E-readiness and ICT environment. The E-government proved to be a successful gamble and is now operating on local levels as well.
Likewise, The E-Commerce is responsible for overseeing the implementation of the UAE e-commerce law and certification services. It promotes adherence to the laws and regulations that allow safe and secure e-commerce transactions. The ultimate goal and mission of the E-commerce department is to promote economic development and technological advancement and innovation within the defined limits of a regulatory e-commerce regime that is fully in line with global standards. It also aims to create a regulatory and licensing framework that will be responsible for providing optimum development and fostering innovation, growth, competitiveness and significant investment in UAE ICT and the ecommerce sector, by adopting best global practices and standards while reacting to market needs and local consumers.
ABU DHABI ECONOMIC VISION 2030
After the completion of major objectives of the UAE’s economic vison plan of 2021, the government has launched another economic vision plan for 2030 in which they hope to achieve sustainable development goals (SDGs). The first initiative was started in 2016 which the introduction of the Dubai 3D Printing Strategy. The goal of this strategy is to establish the image of the UAE as the leading hub of 3D printing technology by the year 2030 by ensuring that 25% buildings in Dubai would be based on 3D printing technology by 2030.
Moreover, Dubai Industrial Strategy is launched to elevate Dubai into a global hub for knowledge-based, sustainable and innovation-focused businesses. The primary aim is to increase the total output and of the manufacturing sector by through innovation in order to make Dubai a manufacturing platform for global businesses and create an environmentally friendly and energy-efficient center for the global Islamic products market. This will help create additional revenue of AED 160 billion by 2030.
Dubai Autonomous Transportation Strategy aims to revolutionize the transportation sector to autonomous mode by 2030. This will generate AED 22 billion by reducing the transportation costs by 44%, carbon emissions, and enhancing the efficiency of individuals while saving time wasted in conventional transportation. The government has also started Abu Dhabi Transportation Mobility Management Strategy which will encourage the use of sustainable modes of transport and reduce traffic jams.
Abu Dhabi government has developed an environmental vision 2030 to ensure integration among the three pillars of sustainability: environmental, economic and social vision. This seeks to protect and improve the natural heritage of Abu Dhabi in the efficient use of resources and lead to a better quality of life for everyone. The top priority of its plan is to minimize the impact of climate change, reduce water and air pollution to ensure healthy living standards and preserve the bio-diversity and habitats of animals.
The Government of Abu Dhabi announced an economic plan for the transformation of the emirate’s economy. The plan aims to further reduce the reliance on the oil sector as a source of economic activity and a greater focus on knowledge-based industries in the future. It aims to achieve this goal by building an efficient and effective globally integrated business environment, manage levels of inflation, support the labor market and enhance their skills.
Moreover, UAE has begun the construction of the largest single-site solar park in the world, The Mohammed bin Rashid Al Maktoum Solar Park. It is estimated to generate 1,000 Mega Watt by 2020 and 5,000 MW by 2030. The project aims to build the world’s tallest solar tower, measuring 260m. This project was originally started under the Dubai Clean Energy Strategy 2050 to promote the use of clean energy in Dubai’s total power output to 7% by 2020, 25% by 2030 and 75% by 2050.
The recent developments and achievements of the UAE has transformed it into a leading country in the world with constant innovations and increased international trade.It has managed to reduce the dependency on the energy sector considerably by investing heavily in manufacturing, tourism, IT sector. The UAE Economic Vision Plan 2021 and Abu Dhabi Economic Vision plan 2030 will further elevate the international standing of the UAE in the global politics as the leading economic country in the world.