United Arab Emirates: Economics and Development

History of UAE and Political structure previous and current

United Arab Emirates was initially formed from tribal sheikhdoms that existed along the Persian Gulf. The country borders the Gulf of Oman on the western side. For many years the inhabitants of the region used to harass foreign ship that passed along the gulf, the solution to this was found in 1835 after the signing of the treaty with the sheikhs. The treaty with the United Kingdom saw the various emirates being controlled by United Kingdom. Through this time, the emirates used to operate in an autonomous way following an Arabic form of monarchy until 1971 when the states gained independence from United Kingdom.

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After the withdrawal by the British in 1971 the Trucial states formed a federation which is now the modern day U.A.E. However, it is notable that two emirates Bahrain and Oman did not join up with these emirates and they became independent on their own. Currently the mode of governance is federal one with a president and his deputy. However, there is still the hereditary rule in practice especially in the local governments but operate under the federal governance. Though the political system retains its traditional mode of set up the sheikhs are also contributors of modernization of the states while still been accessible to the people.

The economic position of each emirate

Abu Dhabi is the biggest state in the United Arab Emirates and arguably the richest. The economic dominance of this emirate is brought about due to the national resources endowed in this area. The oil industry is the biggest contributor to the national GDP and accounted to about 60% in year 2007. However, other sectors of the country are also experiencing tremendous growth. The fact that there has been construction of quality hotels has increased the tourism industry financial output (King, 2008). In 2006, the GDP was estimated to be about $100 billion which was a huge improvement from $40 billion in year 2004. The per capital income at one point hit $70,000 making it the third in the world ranking in reference to per capital income levels. Abu Dhabi is not only the richest city in U A E but is also one of the wealthiest in the world.

Dubai unlike Abu Dhabi which its GDP is mostly dependent on oil Dubai also is a business city. Dubai attracts entrepreneurs all over the world with its spending on beautiful hotels and fine roads. Jobs in Dubai are also notably available. Since many organizations have established their influence in the region the job market is notably bullish. The organizations have notably aspirer to recruit the very best workers from any part of the world.

The real estate business has also been on high growth until recently where the industry has faced crises which have also been transferred to other industries. The effects of this crisis have also been experienced by banks and foreign investors as there have also been fears of unemployment coming up. However, there is a hope amidst these problems as the rich Abu Dhabi has offered a loan to Dubai to try and save the situation (Federal Research Division, 2004).

Sharjah the other state in U A E is also a beneficially of the growth experienced in the U A E. in the recent years the emirate as experienced substantial growth especially in the industrial sector. It is notable that since 2001 the emirate has experienced a growth of 9-10% on the G D P. the manufacturing sector, construction and real-estate sectors have also been in strong growth in the recent years. Industrially the emirate ranks the first among the other emirates. The tourism industrially has also increased its contribution to the GDP as tourists have increased through the years. For the past few decades the average annual GDP rate has hit 11% mark. The Ajman chamber of commerce also notable that in 2006 Ajman about 1.25% of the total GDP of the UAE.’ The small size of Ajman has also been of benefit to them as individual development is felt even in other sectors of the economy (King, 2008).

Fujairah emirate has enjoyed a rapid economic growth on the recent years. The free trade zone policy adopted about ten years ago can be attributed to this success. In turn, the commercial activity has flourished as many organizations have taken the initiative to invest in this region especially in the free zone. The range of companies that have invested in the region are such as engineering, communication, trading and also manufacturing. The emirate also has a multipurpose port that is facilitated by the Gulf. Containers are handled in this area as well as cargo services and the port has notably being ranked third in the world as far as bunkering is concern.

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The tourism industry is also flourishing in the emirate thanks to the magnificent beaches, oasis, yearlong sunshine, and archeological sites. In the past five years the emirate of Ras al-Khaimah has experience a good growth economically. The main cause of these developments would be attributed to the government sound policies the structural reforms and also government investments. Since 2003 Ras al-Khaimah has enjoyed a cumulative growth rate of 50%. In turn, the emirate has turned to provision of quality public services to its occupants. Ras al-Khaimah is also known globally to be competitive in the manufacturing industry especially in the ceramic and cement industries to mention but a few. Tourism and the real estate sectors have also been in the forefront in driving the country to economic success (King, 2008).

It is also notable that the emirate has been accredited grades A by two known international credit rating agencies due to its foreign n and local currency sovereignty. Umm Al Quwain in the 21st century has encountered major economic and technological developments. In deed it is ranked one of the fastest growing emirates in the country. Tourism industry has been the main contributor to the development that is been experienced as the government has taken the imitative to explore the economic resources available the emirate has a coastline that stresses along the peninsula as well as island with sand that enhances tourism industry. Other tourism attractions are inclusive of old harbor dreamland Aqua Park and Al Dour.

How UAE managed itself, type of economic policy adapted

The rise of UAE may be attributed to discovery of oil in their region, before the discovery of oil mostly of the occupants in this region was pearl divers as well, as merchants. The sudden discovery of oil brought about conflict in the region but United Kingdom was there to control the conflict and maintain political stability. The growth of UAE as an economic power house may be attributed to the government policies. The government was instrumental in establishment of a diversified policy in the economy and also formulated an openness policy. In turn, the country has been able to upgrade other sectors of the economy especially the manufacturing and the tourism sectors. The move has seen the GDP of the country rising and the country becoming the second largest Arab economy.

Growth in UAE has also affected other sectors of the economy the banking sector has seen tremendous growth in the last few years with an estimate growth rate of 30% in the last five years. In turn, this has attracted the number of bank branches in the region to about 650 in the country. The high number of banks has become one of the highest in the region as compared to the population in the region. Since the region has a big number of followers of Islam the banking sector has adopted Islam division with some of them turning to Islam banking system (Wilson, 2011).

As previously noted the tourism sector has been greatly promoted in the region. There has been great investment in the tourism sector. The success of this sector can be attributed to the geographic condition of the region as well as the climate of the region. The country has magnificent beaches. Sunny condition glazes the region all year long hence making the region desirable for tourist. The government has in turn complemented this with building of hotels making the region perfect tourist destination.

Various industries in UAE banking, tourism, sport, strength of education and the increased number of the institutions

The fact that most of the country is a desert the sports that are found in this country have a relation to that. Camel racing is a common sport at usually take place especially in the winter season. Horse racing has also been popular in the region as Dubai has even hosted the world horse racing word cup. Golfing has also increased in the region as PGA championship courses have even been constructed. Rugby is also another sport that is rising in popularity in the country as six nations rugby sevens tournament continue been held in Dubai. The education sector has also followed suit in terms of growth.

The main focus is shifted to the higher education where American universities have opened branches especially in Dubai to offer world class career oriented education. United Arab Emirates operates under liberal economy where free zone trading is endorsed. The government has no restriction on profit transfer and repatriation of capital. There exist no import duties in the free zone areas on food stuffs and imports imported to be used on the free zones. Corporation tax and personal taxes are also not there which in turn makes labor cost very competitive (Scott, 2011).

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How Dubai enhanced the economy of UAE and where was UAE 1971 and where is it now

Of all the seven emirates that form United Arab Emirates Dubai has a greater contribution to this country. For one it is the main commercial city of the regions as it encourages investment by various international entrepreneurs. The fact that it has a free port increases the commercial activities in the region which in turn causes an upward trend on the economy. Tourism in Dubai in also higher than the other emirates and it contributes a higher percentage of GDP. The fact that there are also so many people travelling to Dubai increases commercial activities in the region.

It is estimated that the economy of UAE has leaped about 140 times since the formation of the country in 1971. The country had an estimated DH6.5 million in its GDP in 1971 and at 2009 the GDP had grown to about Dh914.5 billion. The oil sector has also grown tremendously from the time the country was formed (staff, 2010). It is also notable that the diversification policy adopted by the government where it seeks to promote other sectors has made the country become the second biggest economy in Asia.

Future scenario of UAE as a country

As earlier noted UAE is increasingly becoming a touristy attraction destination, the trend is likely to improve even more as the government is continually emphasizing on improving of facilities that attract tourist. When it comes to the oil; industry it is believed that there is a likelihood that the oil may reduce in the region. The GDP is therefore likely top decrease with a certain percentage that the improving tourism and commercial sectors will not be able to cover. Dubai is still more likely to be the biggest contributor to the GDP though for now it is not doing well economically. The reasoning behind this is due to the fact that it attracts more people than any other of the seven emirates.

Conclusion

United Arab Emirates has improved so much economically through the years. It is notable that the growth was initially due to the black gold that is available in the area. However, due to the knowledge that this commodity might extinct at some point in time, the government has resulted to diversification policy. The policy aims at improving the other sectors if the economy which were not doing well at the time. The tourism sector is one of these sectors. It has grown tremendously and the region has a high influx of tourist every year. In turn the economy has improved greatly and some sectors like the banking sectors have also benefited due to the same.

References

Basit, S. a. ( 2011, April 7). Tourism at the centre of UAQ growth plan. Web.

Federal Research Division. (2004). United Arab Emirates: A Country Study. Washington D C: Kessinger Publishing,.

King, D. C. (2008). United Arab Emirates. New York: Marshall Cavendish.

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Scott, I. (2011). Dubai update. Web.

staff, E. (2010). UAE economy leaps 140 times. Web.

Wilson, R. (2011). The development of islamic finance GCC. Web.

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