The UAE has one of the most open economies in the world. This tradition of welcoming business and trade goes back to early Gulf history, when ships sailed to India and along the coast of East Africa as far south as Mozambique.
The UAE continues to be a strategic hub, with business-friendly free zones and a quickly growing economy. The country has experienced significant economic growth. Average GDP growth over 2000 to 2006 in the UAE was about 8.4 percent—the highest in the Gulf Cooperation Council, which averaged 6.5 percent.
The GDP for 2014 was $419 billion. This reflects the rich natural resources in the UAE, which has 10 percent of the total world supply of oil reserves and the world’s fifth largest natural gas reserves.
As a mainstay to the economy, oil exports now account for about 30 percent of total UAE gross domestic product. In addition to being an important supplier of energy, the UAE is now becoming an increasingly relevant consumer of energy. The UAE will continue its long tradition of responsible energy stewardship as it develops and diversifies its economy, accelerates the development of additional hydrocarbon reserves and contributes to the development and implementation of alternative energy sources.
Diversification Creates Trade Opportunities
The UAE launched a diversification and liberalization program to reduce reliance on oil and transform its economy from a conventional, labor-intensive economy to one based on knowledge, technology and skilled labor. The federal and individual Emirate governments have invested heavily in sectors such as aluminum production, tourism, aviation, re-export commerce and telecommunications.
Abu Dhabi’s Economic Vision 2030 and Dubai’s Strategic Plan 2015 are leading the drive towards diversification. The strategy is to increase investment in industrial and other export-oriented sectors, including heavy industry, transport, petrochemicals, tourism, information technology, telecommunications, renewable energy, aviation and space, and oil and gas services. Much has already been achieved in these fields, especially in satellite and telecommunications, the aviation sector and in renewable energy, and although short-term priorities have been altered to accommodate changing realities, the long-term strategy remains the same.
At the federal level, the UAE is pursuing its 2021 Vision, which aims to place innovation, research, science and technology at the centre of a knowledge-based, highly productive and competitive economy by the time of the federation’s golden jubilee in 2021. Young people are at the heart of this forward-looking vision, taking on key leadership roles in business, government, science and more. In fact, Arab youth increasingly look to the UAE as the top country to live in, citing the country’s wide array of job opportunities as its greatest draw.
Tourism has played a large part in the success of economic diversification. Abu Dhabi's 156 hotels recorded their best year ever in terms of visitor numbers in 2014, while Dubai's 634 establishments have also experienced a significant increase in guests. Other emirates are following suit. The UAE's two world-class airlines, Etihad and Emirates, as well as constant upgrading of aviation infrastructure, have played a major role in the advance of the tourism industry and are key contributors to the economy. Dubai, in particular, expects that the aviation industry will contribute 32 per cent to its GDP by 2020.
A number of global business indexes have recognized the advantages that the UAE brings to international business. AT Kearney ranks the UAE as one of the top 20 best places in the world for global service business. And the UAE is ranked in the top 30 on the World Economic Forum’s “most-networked countries”—ahead of all other Arab nations, as well as countries like Spain, Italy, Turkey and India.
The UAE also gets positive rankings from Transparency International’s corruption index, ranking in the top quarter as a least corrupt country.
US business has also recognized the importance of the UAE-US economic relationship. In May 2007, the US-UAE Business Council was launched. Today, the Business Council’s members include over 100 companies from both countries.