One of the first things that many business professionals learn is that the start-up process can be highly time- and cost-dependent. Many of the startups that go on to be successful are the result of a long process of building up a base of early adopters, testing out their ideas and improving them based on the reactions of these early adopters, and then pitching them to potential investors.
The UAE is one of the most important places in the world for foreign companies, due in part to its strategic location and favourable investment climate. This has led to the UAE becoming one of the world’s leading locations for tech companies, such as Microsoft, Apple, IBM, Oracle and Google. The UAE’s per capita GDP is higher than that of many countries, with the country also boasting the highest GDP growth rate in the world.
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It is common knowledge that the Persian Gulf countries see the oil sector as one of their primary sources of revenue. The 1973 and 1979 shocks had disastrous implications for non-oil developing countries and those that had already established themselves. Exporters of this fossil fuel, on the other hand, had a substantial current account surplus.
Oil has provided riches, influence, and attention to a huge portion of the Arabian Peninsula’s governments. Qatar, the United Arab Emirates (UAE), and Saudi Arabia are all significant in terms of their vast oil reserves and efficient extraction.
However, we must focus our lens and ask, “Have all of the Arabian Peninsula’s governments managed this industry and the riches it delivers in the same way?” The response is resounding:
Oil is a fossil fuel that depletes over time, regardless of how abundant it is in any state. Due of these shortages, the Gulf monarchs are looking for other ways to diversify their economies.
As a result, nearly all of the countries in this region are undertaking alternative economic strategies to diversify their economies and minimize their reliance on the oil sector.
The United Arab Emirates could serve as a good example of “know-how” in this regard. Abu Dhabi, Ajman, Dubai, Fujairah, Ras al Khaimah, Sarja, and Um el Kaiwain are the seven emirates that make up this country.
Each is governed by an emir, with the emir of Abu Dhabi also serving as the country’s president. The state has been discovered to have the fifth greatest oil reserves on the planet, and the hydrocarbon sector accounts for 30% of its GDP.
It is the world’s fourth-largest crude oil exporter, accounting for 20% of the country’s current account surplus. Despite being such a major activity, it does not have the same level of importance across the country because only Dubai and Abu Dhabi focus on the vast oil deposits.
Significant limits on foreign investment in some areas are imposed in some countries, such as China.
The Chinese government selects which foreign firms are allowed to invest and which are not, envious of the economic activities that keep the country moving forward.
Using Robert Mundell’s Unholy Trinity, the UAE enables free capital mobility with some restrictions on direct investment, particularly in real estate transactions and credit and investment institutions.
Capital movements are used in a variety of industries, with a focus on the management sector, such as HRMS software in the UAE.
Because of this feature, as well as a traditional Peg exchange rate regime, it is far from having an independent monetary policy. Using Rodri’s Unholy Trinity as a lens, the UAE is trapped in a gilded cage as it navigates globalization and the Nation-State framework.
As a result of the foregoing, this country is in a favorable position to make its economic transition to other sectors: capital mobility encourages foreign investment, and international actors capable of forging this transition to new sectors participate in the country’s destiny.
When the UAE Vision 2021 plan was launched by the Vice President of the State, H.H. Sheikh Mohammed bin Rashid Al Maktoum, to diversify the sectors that provided surpluses in the country’s balance of payments, it served as an incentive for various hotel brands to create new locations in the country. Dubai has become one of Asia’s tourism hotspots as a result of its openness.
Although the plan was presented that year, the Public Administration had been planning this massive sector transition for some time. In comparison to Saudi Arabia, the UAE has not been slow in diversifying its economy.
For the first time in 2019, oil accounted for 80% of the country’s exports, nearly 70% of the state’s revenue, and more than 40% of GDP. Saudi Arabia waited longer to publish its diversification strategy than the UAE, despite the fact that the Saudi economy owes its surplus on the oil industry more than the UAE’s.
And, in terms of the present, their efforts at diversification appear to be failing due to a scarcity of investors who believe that Saudi institutions are subject to the will of their king rather than the legal certainty found in other nearby countries such as the UAE. The Emirati dirham is tied to the US dollar in terms of currency, giving its stakeholders confidence.
Practically all of the Persian Gulf’s oil-exporting countries, including Oman and Qatar, have opted for this sort of trade. All of this, however, does not entail that its economy will be dollarized.
In order to cope with the current global economic scenario, the UAE’s government has taken a number of measures in recent years to diversify the country’s economy. Today, the UAE is a leading exporter of gas and oil, as well as a major global investor in a wide range of industries including tourism, financial services, and technology. In addition, the UAE has become a major center for international financial services, a leader in renewable power generation, and a pioneer in the development of smart water and advanced wastewater treatment.. Read more about uae economy forecast 2021 and let us know what you think.
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Frequently Asked Questions
What is the current economic status of UAE?
The current economic status of UAE is unknown.
What is the current economic situation in Dubai?
The current economic situation in Dubai is not good.
What is the general prediction of UAE economy?
The UAE economy is expected to grow at a rate of 3.2% in 2018, and the GDP per capita is $50,000.
This article broadly covered the following related topics:
- dubai economy today
- dubai economy 2018
- economy of dubai
- dubai gdp 2017
- united arab emirates