A key commercial and trading hub
The UAE has established itself as a regional strategic trade hub, known for its business friendly environment and a rapidly growing economy that has experienced significant expansion and diversification over the last 10 years. The UAE has ten percent of world’s proven oil reserves and the world’s fifth largest proven natural gas reserves. While oil production contributes significantly to generating income and spending, diversification remains the key governmental policy in achieving sustainable growth. The government is focused on encouraging the private and non-oil sectors to maintain and grow their roles in the economy. This diversification policy can be traced to the founding of the UAE, in 1971, with revenue from oil and gas exports invested into hydrocarbon and other energy related industries. The policy lead to the growth of related aluminum and petrochemical industries and as the UAE moved forward, the pure dependency on oil and gas exports has significantly decreased.
Economic diversification fueling growth
Consequently, oil exports now account for only 30 percent of the country’s total gross domestic product (GDP). In addition to being an important supplier of energy, the UAE is now becoming an increasingly relevant consumer of energy. As the country further moves from dependency on oil exports, it will maintain its tradition of responsible energy stewardship as it develops its economy, accelerates the development of additional hydrocarbon reserves and emphasize the necessity of alternative sources of energy.
Recently, local governments in the UAE have released policy documents. These strategic policy plans reflect the major economic imperatives listed within the UAE Federal Government Strategy, which is aimed at stimulating economic growth, strengthening the competitiveness of the UAE economy, and upgrading regulations and legislation to match current and forecasted economic growth. Implicit within the federal government’s policy is empowering UAE citizens to take the lead in developing the economy. In order to successfully implement such policy, the government has initiated a comprehensive program that prioritizes leadership development and project management for Emiratis.
Initiatives under the strategy include the establishment of a national competitiveness council known as the Emirates Competitiveness Council, a national statistics office, and a vocational training unit. The strategy also commits to formulate policies for assisting small and medium-sized enterprises in cooperation with local governments, and to prepare a framework for less intrusive regulation in both the free zones and special economic zones. This framework would attend to issues such as labor conditions and environmental conservation.
Abu Dhabi and Dubai visions
As an example, the UAE’s two largest economies, Abu Dhabi and Dubai, have both put together local policy documents that compliment the vision set by the UAE Federal Government Strategy. With over 90% of the UAE’s oil reserves, Abu Dhabi nonetheless has launched several plans to move towards economic diversification. Such plans are laid out in the Abu Dhabi Policy Agenda 2007-2008, the Abu Dhabi Strategic Plan 2008-2012 and the Abu Dhabi 2030 Plan. These plans are not simply aimed at moving away from the oil and gas sectors, but are mechanisms by which profits generated through these industries are used strategically to achieve and support broad diversification and a more well-rounded economy.
Dubai’s economy on the other hand receives a percent input from oil and gas, with its main sources of revenue coming from tourism, transport, trade, construction and financial services. Dubai’s policy document with regards to socioeconomic growth and expansion is outlined in the Dubai Strategic Plan 2015.
1. Abu Dhabi Policy Agenda 2007-2008
2. Abu Dhabi Strategic Plan 2008-2012
3. Abu Dhabi 2030 Plan
4. Dubai’s Strategic Plan 2015