Retail Trade Sector of the United Arab Emirates


Economic growth is the progressive increment of goods and services earned by people for the work done in a given period. The realization of development in a nation depends on the economic output from all sectors of business, which is measured in terms of gross domestic product (GDP) (Government of Dubai, 2019, p.67). Wholesale and retail trade sector is one of the biggest drivers of economic growth all over the world, and it is the leading contributor to Dubai’s GDP rise.

The sector encompasses the exchange of goods produced at the market level, not leaving behind the repair of facilities and automobiles by delivering their spare parts. Increment in the revenue returns in the sector of wholesale and retail trade depends on the steady rise of the market demand for goods in a particular place. The United Arab Emirates (UAE) is likely to grow steadily since its focus is placed on wholesaling and retailing to sustain good facilities for tourists and transportation stemming from oil production and consumption of their products (De Jong, Hoppe and Noori, 2019, p.1657).

This paper, therefore, discusses the wholesale and retail trade sector as a driving factor of economic growth and avenues through which competitive advantage can be created in the United Arab Emirates.

The objectives of this article are to evaluate the structure of the wholesale and retail trade sector, determine area of strength and inefficiency of the United Arab Emirates’ market and to suggest reliable avenues to enhance its competitiveness worldwide. These can be achieved through a review of the current economic development data in the World Bank database and comparing the United Arab Emirates productivity and marketing with other successful nations. The paper will also discuss key development areas for the United Arab Emirates to strengthen its economic growth.

Comparison with the Ideal Competitive Model

Competitive Model Assumptions and Wholesale and Retail Trade Sector

Wholesaling and retailing constitute a significant component of the trading process as they link producers to consumers, and exhibit diversity in goods and services. Together, they are referred to as the distributive sector of trade since they convey or merchandise products from different companies to consumers. The wholesale and retail industry constitutes diverse products from different industries, including processed foods, transportation systems, social amenities and facilities for accommodation or storing commodities (Government of Dubai, 2019, p.67). Moreover, the sector is the leading employer of people in the United Arab Emirates and stands as the potential source of investment.

It implies that there are many firms in the market but no standard quality of products and services offered. Conversely, in the model of a perfectly competitive market, the assumption is that many industries produce identical goods for a large number of buyers. Besides, the value of the labor force for all firms is homogenous and no price taking industry outdoes other competitors in terms of benefits (Miniaoui and Schiliro, 2017, p.70). However, due to variations in the commodities prices resulting from the diversity of goods in the market, there is low competition in the wholesale and retail trade sector.

The wholesale and retail trade sector of the United Arab Emirates has barriers to the market to promote the achievement of perfect competition. The wholesale and retail sector determine productivity in terms of the value given to an employee to work done. Productivity rated a 3.3 percent increment in the United Arab Emirates (UAE) when prices were kept constant in 2018 (Government of Dubai, 2019, p.70).

Despite the escalation in productivity, domination by small enterprises attributed to the high intensity of the labor and poor utilization of technology makes the competition very low. Poor technological advancements contribute to insufficient information about the values of products and communication barriers between the distributors and producers. However, a perfect competition model exhibits the assumption that there is enough knowledge about the market for everyone interested in operating business programs. The implication is that with good communication and knowledge about the market, there is no barrier to investments.

The attractiveness of the United Arab Emirates market promotes competitiveness and economic growth in the region. The model assumes that there is ease for new investments to take place or existing producers to exit the market. The wholesale and retail trade sector of UAE nationals, especially Dubai has fixed capital formation in the market which draws the investors to take chances and drive businesses (Government of Dubai, 2019, p.71). In 2018, Dubai recorded a 20 percent increase in new investments which drove the country’s GDP with double percentage as compared to 2017. Growth in Dubai has also been geared up by the tourism sector.

The investment in wholesaling and retailing in the sector of tourism has led to international and local visitors promoting the industry thereby yielding high revenue returns. As a result, wholesaling and retailing have expanded in the field of tourism leading to the high returns rise by AED 9.8 billion tabulated in 2018 (Shadab, 2018, p.4). It implies that standardizing capital for investment would enhance economic growth and promote competitiveness in the world market.

Sources of Defaults in the Wholesale and Retail Trade Sector

The major potential sources of failure in the UAE wholesale and retail-trading sector are inefficient technology, extensive diversification of revenue sources. Efficiency in communication holds a pivotal role in the success of the economic sector of a nation in the world market. The United Arab Emirates nation has invested technological advancements in oil production industries and limiting the same in other business sectors (Zaidan and Kovacs, 2017, p.291).

Many markets are using an electronic commerce system in which goods and services are displayed to long-distant customers vial online platforms. Failing to achieve e-commerce through technological advancements would mean losing more potential customers. Thus, increasing technology for communication in the wholesale and retail trade sector would promote economic growth through high revenue returns (Delgado, 2016, p.18). On the other hand, failing to achieve technological progress for use in the sector will result in inefficiency in attracting customers and investors due to insufficient knowledge about the market.

Managing intense diversity in a given sector of economy requires a deep understanding of various programs being run. It needs a substantial level of expertise to run multiple economic activities and pull the outputs together, and that means a higher level of education has to be invested on. The United Arab Emirates, on the other hand, has not enough skilled personnel to establish the expected efficacy in running the wholesale and retail trade sector which has hiked in the region (Government of Dubai, 2019, p.72S).

Moreover, diversity requires intense labor to aid maximum return from the invested capital, thus more people have to be employed of which UAE has not enough capacity with the desirable skills. The likelihood that inefficiency is existing in the current market is high and failure due to that in the world’s competitive market is high (Tipu and Sarker, 2019, p.6). Probably, specialization in various business programs to prominent economic activities attracting investors would aid maximum outcome.

The flow of finances and world trade factors linked to financial transactions are potential sources of inefficiency or failure of the United Arab Emirates wholesale and retail trade sector. There are exhibited fluctuations in the currency transactions which makes foreigners seeking services to be charged at high-interest rates (Delgado, 2016, p.18). Therefore, it requires investing in the available United Arab Emirates resources intensely to achieve maximum output from both domestic and international markets (Krzymowski, 2020, p.15). Otherwise, these two factors linked to financial transactions may lower the price of quality UAE services at the international level.

Factors that would Enhance Competitiveness

Attaining a high level of competitiveness in business requires diversification and knowledge in the process of running business activities. Even though diversity is a potential risk to the economic development of the United Arab Emirates, it would work as an instrument of high profiling development if well managed. Diversification enhances economic development by offering multiple opportunities for people in a growing environment, thereby committing nearly all into productivity (Miniaoui and Schiliro, 2017, p.70).

However, it has with its multiple sources of breakdown since all risky areas are spread out in different business programs making the economy susceptible to failure from the external market. To shield the UAE economy from downfall due to diversification, high quality of goods and services has to be provided and homogenous market prices have to be implemented.

Sustainable development requires a high level of creativity to drive innovative projects into implementation for business activity to kick off. The recent economic plans by the UAE government considered the exploitation of knowledge and innovative skills in achieving development and competitiveness in the world market (Miniaoui and Schiliro, 2017, p.71). The most instrumental way of ensuring quality in the field of tourism is utilizing a higher level of understanding in offering services and providing variety to the customers who are visiting. (Nadkarni, S., Morris, S. and Teare, R 2019, p.169). Therefore, innovation is an instrumental factor in enhancing competitiveness in the market.

Expansion of technology into the wholesale and retail trade sector is an important factor that would promote competitiveness. With the increase of online marketing, promoting goods and services through online platforms would enhance the efficiency of reaching to customers from all over the world (Government of Dubai, 2019, p.72).

Moreover, achieving advertisements through social media platforms would be very easy since, in one hour, potential customers shall have got the information through internet links. Technology is important in monitoring the operation of engines and accounts for one of the factors enhancing increment in productivity (Haddad, 2020, p.267). The UAE would steadily benefit from the advanced technologies in maximizing economic growth in the sector of Wholesaling and Retailing.

Remedies to Address Market Failure or Growth Barrier

Mitigating failure in the market requires determining the quality of products being disseminated and putting comparison with the demands of the customers. The United Arab Emirates market encompasses a variety of goods and services given to different customers. Therefore, determining the quality of products supplied to the market to the demands of the customers would help in realizing the points to adjust and become competitive (Tipu and Sarker, 2019, p.9).

Furthermore, looking into the nature of the goods produced and sourcing for the appropriate market would ensure economic growth. Working at the right selling and buying time would ensure maximum return from the sales leading to good financial backflow to the producers. Consequently, market failure or inefficiency in delivering goods and services would be very minimal in the United Arab Emirates.

Formulation of policies by the government which regulates marketing and production is also necessary for mitigating market failure and growth barriers. The process of exchanging goods and services for money or other commodities requires a standardized quotation on prices and quantities which is universal. Financial volatility and market break down stemming from unregulated exchange rates and overexploitation by consumers can be prevented through government policies.

The policies would monitor the status of market demands with respect to particular goods and services (Delgado, 2016, p.19). As a result, there will be monitory of the flow of finances and realization of growth or high investments in a diversified wholesale and retail trade sector.


The wholesale and retail trade sector is one of the drivers of economic development and competitiveness in the market. The UAE requires high technological advancement, good innovation, and strong government policies ensuring the risks associated with diversity in wholesaling and retailing and well managed. Finally, it requires good market knowledge and an understanding of the qualities of products on-demand to remedy market failure or barriers for economic growth.

Reference List

De Jong, M., Hoppe, T. and Noori, N., (2019) ‘City branding, sustainable urban development and the rentier state: how do Qatar, Abu Dhabi and Dubai present themselves in the age of post oil and global warming?’ Energies, 12(9), p. 1657.

Delgado, P. A. A. D. L. (2016) The United Arab Emirates case of economic success: the federal government policies. Master’s Thesis. Univeridade Catolica Portuguesa. Web.

Governement of Dubai, (2019) ‘Dubai economic report’ ,Deira, Dubai: Department of Economic Development. Web.

Haddad, A. M., (2020) ‘The impact of education on the sustainable development in United Arab Emirates: a simultaneous equations approach’, Sustainable Development and Social Responsibility, 1, (4) pp. 269-277.

Krzymowski, A., (2020) ‘Development goals in Arab Region-United Arab Emirates case study cele zrownowazonego rozwoju w regionie arabskim-studium prsypadku zjednoczonych emiratow arabskich’, PROBLEMY EKOROZWOJU, 15(1), pp. 211-220.

Miniaoui, H. and Schiliro, D.,( 2017) ‘Innovation and entreprenuership for the diversification and growth of the gulf cooperation council economies’, Business and Management Studies, 3(3), pp. 69-81.

Nadkarni, S., Morris, S. and Teare, R., (2019) ‘Innovation-centric courses in hospitality management education in Dubai’, Worldwide Hospitality and Tourism Themes, 11(2), pp. 166-172.

Shadab, S., (2018) ‘Tourism and economic growth in the United Arab Emirates: a granger causality approach’, Development, 20(4), pp. 1-6.

Tipu, S. A. A. and Sarker, A. E., (2019) ‘Developing an integrative dynamic framework of indigenous entreprenuership: the case of United Arab Emirates’, International Journal of Public Administration, 43(5), pp. 1-11.

Zaidan, E. and Kovacs, J. F., (2017) ‘Resident attitudes towards tourists and tourism growth: a case study from the Middle East, Dubai in United Arab Emirates’, European journal of Sustainable Development, 6(1), p. 291.

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