Introduction

The United Arab Emirates is the region’s second-largest economy after Saudi Arabia and ranks among the high-income countries of the world. It is in the eastern part of the Arabian Peninsula and sits on land measuring 32,278 square miles. Four decades since its formation, the UAE has achieved an income level only comparable to European countries that began industrialization in the late 18th century. However, the UAE did not follow the hypothetical stages of industrialization and economic development, like most developed countries, because the oil reserves of the nation allowed it to skip the phases of wealth accumulation[1]. The massive oil deposits provided a shorter route to prosperity as opposed to an unnecessarily lengthy process of acquiring capital and saving for economic development. The shorter route to prosperity could have contributed to the many social development processes that are missing in the UAE economy. Lack of enough skilled and unskilled labor are some of the consequences of skipping the hypothetical route to economic development. Due to the abundance of oil and gas, the country adopted resource-based industrialization as the main strategy; the approach is based only on utilizing natural resources. The economic security of the UAE is at threat given the centrality of revolutionary upheavals experienced in some parts of Middle East and their potential impact on the region’s stability in future. In essence, UAE’s economic journey has been made swift by the massive endowment with gas and natural oil.

Before independence from Britain in 1971, each Emirate ran its economy independently. The primary drivers of the economy were based on subsistence agriculture and tourism. The core activities were seafaring, pearl diving, fishing, and the discovery of natural resources of commercial value[2]. Formation of the UAE was completed in 1971. It was as a result of the merging of six independent states of Dubai, Abu Dhabi, Fujairah, Sharjah, Umm al-Qaiwan, and Ajman and a federal Constitution was created to mark the independence of the union. Abu Dhabi is considered as the largest, covering 85% of the land, while Ajman was considered the ssmallest of the Emirates.  The capital city of the UAE is Abu Dhabi, possibly due to its significance contribution to the nation. Before the discovery of oil in 1973, the union reflected a nation with a simple subsistence economy.

The age of economic development in the UAE began after the formation of the union and the establishment of formal social, political, and economic institutions that coincided with the massive increase in production and the export of oil leading to an explosive rise in oil prices past 1973[3].   The existing political structures formed before the discovery of oil provided a high pillar for social and economic stability and considerably reduced the possibilities of internal social and political unrest. In turn, the peaceful atmosphere promoted the standard of living of the people by providing a high quality of social services, good salaries, and infrastructural development.

Oil and Mineral Resources

The UAE’s phenomenal growth has largely been dependent on the discovery of oil and gas reserves as well mineral resources. The country is well endowed with vast reserves of onshore and off-shore oil and gas reserves that are suitable for commercial extraction. The oil industry is well managed, and the country has always used the best technology to harness the resources progressively in the most productive and efficient way possible. The endowment with these natural resources has enabled the country to deal with its dry climate, high temperatures and the humid summer.

Specific Policies Adopted by the UAE Government to Expand Domestic Economic Security

The complex process of nation building in the UAE nation building was among the leading causes of implementing a development policy based on the interventionist-redistributive model that was favored by huge natural resources available[4]. The development strategy works efficiently because the country has sufficient natural resources that allow for the creation of a vast welfare system for the entire population of the six states regardless of their contribution to the economy. Since the nation enjoys a relevant period of political and social stability, it is possible to implement a system where the equal distribution of oil revenues can be carried out through social and economic infrastructure and high-quality social services like health and education. The country is estimated to have a population of around 2,624,000, which is relatively small compared to land size and oil wealth. This has been instrumental to its government policies.

Roadmap of the UAE’s Economic Progress

The government set specific guidelines and priorities to ensure continued success in the Emirate’s economic development. Taking these requirements as the key parameters, the UAE Vision 2030 was developed in consultation with the private sector to ensure equal stakeholder participation and clarity of the long-term goals of the country[5].  The government’s wish was to see the development of high-value employment opportunities for its population even after the depletion of oil reserves. During early 70s, most of the nation’s population lacked the necessary skills needed for modern development.  Consequently, the government’s role was to enhance a favorable business and economic climate to integrate the region into the global business economy, attract local and foreign investment, and facilitate capital export through target investment with global partners.

Sustainable economic development was only achievable through the expansion and diversification of strategic economic sectors.  The segments include alternative energy, petrochemicals, metal production, tourism, aviation, aerospace and defense, banking and finance, healthcare equipment and services, pharmaceuticals, life sciences and biotechnology, trade, transport and logistics, telecommunication, media, and education[6]. Over the last decade, the UAE has expanded its beach line by building artificial islands to increase sources of income in case it exhausts its oil reserves[7]. The nation has also expanded its infrastructures such as rails, roads, and ports and made Dubai a modern business hub.

External Economic Intervention for the UAE

The political leadership of the UAE operates under a broad foreign policy framework since its formation. The approach emphasizes diplomacy, negotiation, and the willingness to cooperate with other nations for mutual prosperity. The UAE is highly committed to engaging neighbors and the international community concerning regional and global peace, security, and economic stability[8]. The government achieves these goals by supporting the partnership, dialogue, tolerance, and respect for all people regardless of their perceived differences. The political administration pursues balanced, efficient, and wide-ranging ties with the global community in the search of labor, market, capital, and social interaction.

The UAE also condemns the actions of escalating tension and violence perpetrated by the Islamists groups that expand the scope of terrorist activities in the region. Terror networks deliberately undermine peace, economic prosperity, and regional security[9]. The nation condemns the brutal methods used by extremists as they do not follow the teachings of Islam which advocate for tolerance and peaceful coexistence.

The UAE has a two-tier labor market. At the top is the domestic labor force comprising of ten percent, while the rest is imported from other countries. The nation has reaped significantly from foreign expertise and a skilled workforce that has initiated the country’s economic development since the 1970s[10]. The employment outcome in the country does not reflect the labor structure because the oil industry only employs less than two percent of the entire workforce and reflects the capital-intensive nature of the industry.

Regarding foreign investment, the UAE is one of the Arabian states with the highest foreign investment. In particular, the country has managed to attract a lot of foreign capital in the transport, hospitality, manufacturing, and real estate sectors by investing in the future[11]. For example, most of the houses and hotels in the artificial islands are owned by famous celebrities in sports, music, and industrialists from other parts of the world. The initiatives have been highly praised by the people of the UAE because they have helped in building professionalism and global interactions of the locals[12].  Besides, citizens market their businesses to customers from foreign nations to increase the market coverage of their products. Interaction with other states has helped the UAE access cheap and qualified labor and investment opportunities abroad.

Relevant Environmental Elements That Impact the Economic Potential of the UAE

Efforts to improve the economic condition of the UAE focus on technological innovations and high investment in innovative research and development as the primary trigger of economic growth. In this regard, the endogenous growth theory highlights the essence of technological progress and productivity factors. Other researchers have stressed the fundamental roles of institutions caused by the long-term growth strategy[13].  Recent development experiences indicate that the UAE have provided the appropriate operational environment as the key ingredient for sustainable development.  The UAE government has realized the best and most visible economic development through diversification and the establishment of cities regional centers for real estate development, finances, tourism, shopping, export, and re-export.

However, infrastructural development has also affected the natural environment in the cities by interfering with the flow of wind and precipitation patterns[14]. The artificial islands have also suffered land dereliction in areas that provide construction materials. Moreover, the sea breeze and ocean currents have been disrupted and subsequently, affected the marine life. However, the benefits are more than the challenges, and the marine life can adapt to the changes in their ecosystem with time.

Bibliography

Abdelkarim, Abbas. Change and Development in the Gulf. New York: St. Martin’s Press, 2009.

Constable, Nicole. Migrant workers in Asia: Distant Divides, Intimate Connections. Abingdon: Routledge, 2010.

Herb, Michael. The Wages of Oil: Parliaments and Economic Development in Kuwait and the UAE. Ithaca: Cornell University Press, 2014.

Low, Linda. Abu Dhabi’s Vision 2030: An Ongoing Journey of Economic Development. Singapore: World Scientific, 2012.

Parker, Cristina and Douglas M. Warde. Economic and Political Issues in the Middle East. New York: Nova Science Publishers, 2011.

[1] Linda Low, Abu Dhabi’s Vision 2030: An Ongoing Journey of Economic Development (Singapore: World Scientific, 2012).

[2][2] Ali AlSadik and Ibrahim Elbadawi, The Global Economic Crisis and Consequences for Development Strategy in Dubai (New York: Palgrave Macmillan, 2012).

[3] Abbas Abdelkarim, Change and Development in the Gulf (New York: St. Martin’s Press, 2009).

[4] Cristina Parker and Douglas M. Warde, Economic and Political Issues in the Middle East (New York: Nova Science Publishers, 2011).

[5] Linda Low, Abu Dhabi’s Vision 2030: An Ongoing Journey of Economic Development (Singapore: World Scientific, 2012).

[6] Ali AlSadik and Ibrahim Elbadawi, The Global Economic Crisis and Consequences for Development Strategy in Dubai (New York: Palgrave Macmillan, 2012).

[7] Nicole Constable, Migrant workers in Asia: Distant Divides, Intimate Connections (Abingdon: Routledge, 2010).

[8] Abbas Abdelkarim, Change and Development in the Gulf (New York: St. Martin’s Press, 2009).

[9] Linda Low, Abu Dhabi’s Vision 2030: An Ongoing Journey of Economic Development (Singapore: World Scientific, 2012).

[10] Michael Herb, The Wages of Oil: Parliaments and Economic Development in Kuwait and the UAE (Ithaca: Cornell University Press, 2014).

[11] Michael Herb, The Wages of Oil: Parliaments and Economic Development in Kuwait and the UAE (Ithaca: Cornell University Press, 2014).

[12] Nicole Constable, Migrant workers in Asia: Distant Divides, Intimate Connections (Abingdon: Routledge, 2010).

[13] Cristina Parker and Douglas M. Warde, Economic and Political Issues in the Middle East (New York: Nova Science Publishers, 2011).

[14] Linda Low, Abu Dhabi’s Vision 2030: An Ongoing Journey of Economic Development (Singapore: World Scientific, 2012).

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