Conclusion

UAE is a country that is set up for massive growth in the coming years. The government is taking steps to diversify the economy and reduce dependence on oil exports, tourism is contributing to the growth in Abu Dhabi, which is on the path to becoming a major financial center of the future. Furthermore, current economic factors, such as the low unemployment rate, high immigration rate and high GDP per capita predict future success. Finally, UAE has several trade relationships in place with major world powers, helping its growth and securing its future. Either way, UAE is a country to watch, and its economic future depends on the policies the government will adopt in the face of increasing tension in the Middle East.

UAE Imports and Exports

Imports: $159 billion (2010)
Exports: $195.8 billion (2010)

Source: CIA World Factbook

UAE Unemployment Rate

Source

Foreign Trade

UAE engages in a relatively large amount of international trade: it is amongst the top 25 exporters and the top 30 importers in the world. Furthermore, rising oil prices provided a large commercial surplus for the country in 2008. However, the current drive to diversify the economy will affect UAE's foreign policies in the coming years.

Macroeconomics

UAE has been dependent on oil, and economic policies revolved around this commodity. However, in recent years, UAE has taken steps to diversify its economy. The following is an excerpt from a macroeconomic report on UAE by Dr. Abdulaziz Istaitieh.

"During the last decade the UAE economy has shown steady growth and the value of total
GDP has more than doubled. Oil’s share in GDP has declined, whilst non-oil GDP has been the
major driver behind the UAE’s economic growth (accounting for 73% of GDP in 2005). The
major non-oil sectors in the UAE economy are: manufacturing (20%); trade (17%); real estate
(12%); construction (11%); transport, storage & communication (10%); and finance (9%).
Furthermore, although Abu Dhabi and Dubai both contribute highly to the country’s GDP (59%
and 29% respectively), the latter is actually more responsible for the remarkable growth
witnessed in the majority of non-oil sectors. The UAE’s capital productivity significantly exceeds labor productivity both when including and excluding oil from calculations. When omitting oil, labor productivity in Abu
Dhabi is almost halved and capital productivity drops to fifth place amongst the Emirates, thus
demonstrating the importance of oil to both labor and capital productivity levels in Abu Dhabi
and ultimately the UAE’s overall economic growth."

Banking and Finance

UAE used the Indian rupee as the national currency until 1966, when different parts of the country started using different currencies. In 1973, the government established the dirham as the national currency, and the exchange rate of 3.67 dirhams to 1 US dollar has been constant since 1980. After a period of instability in the banking structure, the government reluctantly passed a law to convert the Currency Board into the Central Bank, strengthening the country's system.

Source: countrystudies.us.

GDP

Sociocultural Context

Surprisingly, less than 20% of UAE's population are Emirati. The majority is South Asian, originating from India, Pakistan, and Bangladesh. The most widely practiced religion is Islam, with Sunni Muslims making up a majority.  As a result, there are few internal problems regarding religion. The country is also making efforts to improve the educational system, with the student populations at the country's universities rising. This sociocultural context seems to indicate that UAE has the potential for strong growth in coming years.

Government and politics

The government of UAE is a federation with powers being specified for the federal government and for each of the seven individual emirates. Interestingly, UAE does not have any official political parties, according to the US Department of State. Instead, the emirates are ruled by dynasties. However, the modernization efforts have led to modernization in the political arena as well, and the country seems to be moving towards incorporating an election process.

Demographics

From the US Department of State:

"Population (2009 est.): 6 million. 
Ethnic groups: Indian (1.75M); Pakistani (1.25M); Bangladeshi (500,000); Other Asian (1M); European and African (500,000); and Emirati (890,000).
Religions: Muslim (96%), Hindu, Christian.
Languages: Arabic (official), English, Hindi, Urdu, Bengali.
Education: Years compulsory - ages 6-12. Literacy - 90%.
Health: Life expectancy - about 78 yrs.
Work force (2008): Total - 2.8 million. Agriculture - 4.9%. Industry - 61.9%. Services -35.8%. Female participation rate – 41.8%."

Imports and Exports

According to the US Department of State, UAE exports $157 billion, with the vast majority of that being petroleum and petroleum products. UAE also imports $126.6 billion, mainly in machinery, chemicals, and food.

History of UAE

UAE started as a group of seven organized sheikdoms between the Persian Gulf and the Gulf of Oman. After an end of a period of being under British protection, the sheikdoms formally united under UAE in 1972. In 2004, UAE's first president, Sheikh Zayed bin Sultan al Nahyan, died and was succeeded by his son and current president, Khalifa bin Zayed al Nahyan.

Welcome

Hello, this blog focuses on the economics of United Arab Emirates and the changes that the country has faced over the past several years. I will focus on construction in particular, considering that parts of the country (such as Dubai) are rapidly modernizing.

Inequality in UAE

While parts of UAE are very urbanized, such as Dubai in the picture above, there are still many rural areas within the country. The picture below is an example of the less developed parts of UAE. Dubai is becoming a major city, promoting tourism and interest in UAE, yet many parts of the country lag behind developmentally. This example of inequality is a hurdle UAE will have to face in the future as it develops further.



Both pictures are from the Biking Diaries blog.

Burj Khalifa

Burj Khalifa, located in Dubai, is currently the tallest building in the world. Picture is from the building's website.

Map of UAE

from the CIA World Factbook.