Economic Development In The Uae Economics Essay

Economic Development In The Uae Economics Essay UAE United Arab Emirates as we call it has managed to become the regional trading hub of the middle-east along with being an enormously growing business capital. The country is also referred to as the wealthiest in the Region with the GDP per capital income of around $49500 (forecast 2011). The credit for much of the development goes to the oil and gas reserves of the country because the UAE has the third largest reserves of the OPEC. Even though the UAE is fairly dependent on oil as it comprises of 20% of the international GDP, yet the diversification measures are constantly taken to shift the economy away from being highly dependent on the Oil prices. This diversified economy of The UAE is definitely a success and a role model for the all the other economies in the GCC to follow. The vision of UAE is to become the best country in the world by 2021. (GCC) UAE VISION 2021 The vision of UAE is to be among the best countries on the world by 2021. They aspire to be united in knowledge, prosperity, destiny and responsibility. The vision 2021 portrays some of the responsibilities of the UAE government. UAE will introduce high quality global standard infrastructure, government services and recreational environments. Emiratis will benefit highly from customer oriented government services offered at the best quality. Excellent communication infrastructure will promote business networking and give them a leading edge when they interact with the world UAE Government Strategy 2011-2013 UAE government strategy highlights the main priorities of the government in the coming two years covering the period of 2011-2013. The strategy will act as a benchmark for federal entities to develop and their strategic plans. The strategy lays the foundation for the vision of 2021. The strategy is basically divided in to 7 general principles Enhance the role of national entities and in carrying out operative regulations and cohesive policies by successful planning and implementation. Enhance coordination and cooperation among National entities and local government. Focus totally on delivering high class, customer oriented and integrated government services. Spend in human resource competences and create and polish leaders. Encourage efficient resource management within the national entities and leverage the dynamic partnerships. Implement a culture of brilliance through strategic thinking, uninterrupted performance improvement and excellent results Encourage transparency and enhance the accountability mechanisms of the government throughout the federal entities. UAE is the second largest economy in the Arab gulf and it is consistently ranked among the fastest growing economies of the world. During the past 40 years GDP of UAE has grown tremendously from $6.5 billion in 1971 to a massive total of $1248 billion in 2011.which is roughly a 192x increase (The glorious four decades of the UAE). The per capita GDP of Dubai has increased from 100000 dirhams (1975) to 174000 dirhams in (2011). This outstanding performance has forced international organizations to rank Dubai among the top emerging markets in the world along with china, Turkey, India, Singapore, Russia, Malaysia and Brazil. The strategy for the diversification of income resources has proved successful. According to local and international report the steady economic growth has not solely resulted from energy production and exports of oil, as the case with other oil economies, it has resulted from diversifying sources of income and minimization on the reliance of oil. Many sectors such a s the financial services, logistics, tourism and other strategic sectors in the economy have not been favored by the government for the provision of oil. According to recent statistics oil contribution tom the GDP has decreased from 70% in 1971 to 29% in 2010. This approach portrays a massive achievement of the country in the area of economics because it portrays great contribution towards the stability of the national economy. According to the recent forecast by (IMF), the GDP growth of UAE is prone to rise from 3.3% in 2011 to 3.8% in 2012. It is also expected that the UAE will maintain a double figure surplus of around 10.3% in 2012. Environment has been rated as a potential component of The UAE development strategy, UAE has never overlooked the environment factor and has always regarded environment protection as a major goal of its sustainable development strategy. The government has addressed harsh desertification and developed water resources for increasing greenery. Agriculture has also been addressed thoroughly by the government of UAE, and the government has been successful in achieving goals despite the problem of scarcity and desertification. The main goal for the development and growth of agriculture sector has been the provision of food to the local economy. This is because the government regards it as being an element of national security. The industrial sector has also boomed a lot on the 21st century with investment in this sector amounting to DH101.12 billion in 2010 (IMF). Around 4960 industries have been established and the total number of workers employed has increased dramatically. This clearly portrays the vision of federal and local government to modify and develop the Industrial sector. Over the years UAE has managed to establish a modern infrastructure which solidly addresses the needs of public services for citizens and businesses. The infrastructure not only includes roads, power and bridges but also transcends to include, specialized and economic free zones. The free zones are more than 30 in number and are widely spread all over the emirates. The real estate sector at the Abu Dhabi and Dubai contributed heavily towards the transformation of the country (GCC). The real estate in these states has been referred to as the world renowned real estate front with new and modified concepts and green building. The tourism sector has also improved tremendously over the years. It was the record high in 2010 with the number of tourists reaching over 10 million. What majorly contributed to the tourism sector has been the strategic location and domestic flow of local and foreign investments in the sector. The investment size associated with tourism and infrastructure has been 47 billion Dh on average over the last 10 years. Presently the Dubai Airport is ranked as the fourth best Airport of the world. Conferring to the Travel and tourism competitiveness report of 2011 published by the world economic forum (IMF), the UAE was ranked 30 among the lot of 139 countries and was ranked first in the middle -east as the most progressive country in tourism and travel with the score of 4.78. The foreign trade accounts for 70% of the UAE Gross Domestic Product (GDP). The country has a wide network of trading partners around the world and it enjoys bilateral trade relations all of them. It is forecasted that the foreign trade will grow in excess of 25% after 2011, because of the massive improvements in the economic environment of the UAE (Trade). The UAE is among the largest exporter and importer countries of the world with exports of $235 billion and imports of $170 billion. The exports comprise of 2% of the total world exports whereas the imports comprise of 1.4% of the total world imports. The massive balance of payment surplus has benefitted the economy of UAE tremendously. Non-oil exports of the country have increased form Dh 2 billion in 1981 to Dh 27.4 billion in 2010. Dubai standard for 82% of the total nonoil exports of the UAE in 2010. Abu Dhabi comprised of 14% and Ras-Al-Khaimah comprised of 2.5% of the total nonoil exports in the UAE. The financial services sector (UAE) has also witnessed rapid growth in the past few years. An important role was played by the commercial and specialized banks of the UAE in sponsoring economic activity and trade in the country. Fifty one banks are currently operating in the country including 23 national banks. Financial markets have also contributed heavily in mobilization of domestic savings; the Abu Dhabi securities market and the Dubai financial market are figured as the main financial markets of the country. Dubai International financial market was also established to become the free zone for the most important financial centers in North Africa and the Middle-East. The government also invested its accumulated surpluses in international institutions such as the Abu Dhabi investment authority, and this contributed heavily to the countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s domestic wealth (Suwaidi). When it comes down to competition UAE has achieved record figures in Arab and the international competitiveness field. UAE regards competitiveness as its most strategic direction. For the sake of this the government has established a council known as the Emirates competitiveness Council. The aim of this council is to improve the performance of the key sectors of the country and to ensure the wellbeing and good quality life for its citizens. The economic council of Dubai also setup the Dubai competitiveness center. The aim of this center is to kind Dubai as the utmost competitive city in the world. Abu Dhabi department of economic development has also established a competitive office. All these bodies work together for the national economy which is taking a lot of strides to include UAE among the best economies of UAE till the year 2021. UAE is now ranked among the top in the competitive group. It is ranked third in the Arabs world and twenty seventh worldwide (Jones). The main competitors of UAE in the Arab world have been Saudi Arabia, Kuwait, Oman and Egypt to say the least. The global competitiveness report has allotted high rank to the UAE for the past three years (2011-2012). UAE leads the list of emerging markets that includes India, China, Russia and Brazil. E-Government in the UAE. The federal egovernment project started in the UAE in the year 2001 when the ministry of finance carried out the edirham. It was the first eservice that helped the electronic payment for accessing the federal government services (Interact).Since then, many of the federal and local level entities have launched eservices that have proven to be time efficient and cost efficient and the government is also experiencing reduced operational costs and increased efficiency In offering the services. The egovernment strategy was then setup in 2003. IBM helped to conduct an evaluation study for the development of the executive plan. The ministry of finance started an operational plan for e-government in 2004. The memorandum of understanding was signed between Etisalat and the government to provide infrastructure for e-government in March 2005. Then finally in june 2008 the TRA passed a resolution to develop a plan for IT in the federal government. Federal E-GOVERNMENT Plan 2012-2014 The vision of the federal government of the UAE 2012-2014 plan is to maximize the competitiveness of the UAE by the provision of world class practices in all the areas of E-government. The federal E-Government plan development is dependent upon a strategic framework consisting of three dimensions. The dimensions include E-Services, E-readiness and the ICT environment (Interact) E-Government has been successfully launched in the UAE and is operating at local levels as well. six out of seven emirates including Abu Dhabi, Sharjah, Dubai, Ajman, Fujairah, and Ras Al Khaimah. All of them have launched their official portals. E-COMMERCE in the UAE The E-Commerce is responsible for overseeing the implementation of the E-commerce Law and the services of certification in the UAE. It promotes adherence to the regulations and laws which enables safe and secure E-commerce transactions. The ultimate mission and target of E-commerce department is to promote economic development and technological advancement and innovation within the defined limits of a just e-commerce regulatory regime totally in line with the global standards (Aya). It also aims to establish a regulatory and licensing regime that will be responsible for providing optimal development and encourage innovation, growth, competition and massive investment in the UAE ICT and the ecommerce sector, via implementation of the best global practices and standards while responding to the market needs and local consumers. THREATS TO THE UAE ECONOMY UAE economy is not perfect as yet and is still not the number one economy of middle-east. It has to strive hard in order to be more competitive in the region. The economy of UAE is facing heavy competition from Saudi Arabia and Egypt. Saudi Arabia has a lot of oil reserves and many seaports for international trade. The competition is intense. UAE has just managed to pass both Saudi Arabia and Egypt in the UAE (Abdul Basit) but it is still not enough to get a comprehensive lead in the economic standing of the region. Some of the recent threats to the UAE economy has include the recent Euro Crisis in Europe. IMF has issued a warning to the UAE that it could be hit by the worsening situation in Europe after the recent news of Spain seeking a 100 billion euros bail out. Other threats to the UAE economy include the heavy government subsidies by the government in the UAE and its agriculture sector. The obsolete tax system is ranked as a potential threat as well because it is very different from the tax system around the world. Job cuts in the Expanding UAE economy have also been listed as a potential threat to the economy as a whole (Bundhun). Diminishing Oil reserves in Dubai is also an issue that needs to be taken into account. Although UAE has been pretty successful in shifting from oil to nonoil exports, yet the focus should be on decreasing the oil exports further to create a provision for diminishing oil reserves. The emerging economic world powers in the world include China, India, Turkey, Russia, Brazil to name a few. UAE is a trading partner to china and the importance of trading partners is every high because china is also among the fastest growing emerging economies today. USA is going through a a bad patch right now because of its deteriorating economic conditions, but it is a strategic partner of UAE in trade and infrastructure. American goods and services discover a ready market here provided they bring a technological superiority or a new feature. Along with that US is also among the biggest competitor of UAE because of its high quality products with latest technology and after sales service. The competition is intensely high and UAE will have to focus on the quality and after sales service to compete effectively in the future (Interact). CONCLUSION Looking at all the recent developments and the achievements of UAE, it is true to say that UAE has been acting like a champion in the past decade with constant innovations and increased international trade. The introduction of E government and E commerce has helped the domestic economy lot in everyday life (Aya). The main focus of this system by UAE was to accelerate continuous in the economy. The International standing OF UAE has also improved a lot and it is now ranked 27th in the world and third in the UAE (Jones) which is no less than a milestone for them. The dependency on oil exports has increased and non-oil exports now comprise of more than 70% of the total exports, Dubai being the highest contributor in the non-oil exports sector. This will also prove to be an Asset for UAE in the times of oil crisis. The manufacturing sector of the economy is also booming and is now ranked as the number one manufacturing sector in the UAE. With all these milestones and achievements it is no t hard to believe that UAE will be among the best economies of the world till 2021.