Download United Arab Emirates - Economic Development

Saif Mohamed
12/16/10
Social Studies 10 - Block 1
Economic Development Report: United Arab Emirates
-Background Information:!
!
The United Arab Emirates (UAE), is a federation that consists of seven states that
are termed emirates and those states are Abu Dhabi, Dubai, Sharjah, Ajman, Umm alQuwain, Ras al-Khaimah, and Fujairah. An emirate is a political territory that is ruled by a
dynastic Muslim Monarch styled emir. An emir is a high title of nobility that is used
throughout the Islamic world. The UAE is located in Southwest Asia on the Persian Gulf.
The capital of the UAE is Abu Dhabi, which is also the countryʼs center of political,
industrial, and cultural activity.
United Arab Emirates
-Economic Background:
!
The United Arab Emirates is an MEDC, because of socioeconomic indicators such
as GDP per capita, unemployment rate, life expectancy at birth, etc. The UAEʼs main
resource is oil, but oil was discovered in the 1950s and before that the UAEʼs economy
was dependent on fishing and a declining pearl industry. Then in 1962, after Abu Dhabi
became the first of the seven emirates to begin the exporting of oil, the countryʼs society
and economy had begin itʼs transformation. Along with oil, some of the natural resources
that UAE have are petroleum and petrochemicals, fishery, pearls, as well as other
agricultural products. Some of the main industries in the UAE include, petroleum and
petrochemicals; finishing, aluminum, cement, fertilizers, commercial ship repair,
construction materials, boat construction, handicrafts, and textiles. Some of the agricultural
products that are produced in the UAE are dates, vegetables, watermelons; poultry, eggs,
dairy products; and fish. Some of Dubaiʼs entrepreneurshipʼs include, the Burj Khalifa,
which is the worldʼs largest tower, along with Dubai Mall, which is the worldʼs largest mall,
also the Mall of Emirates, which is the largest mall in the Gulf region, as well as Dubai
Land, which is under construction and is going to be the worldʼs largest amusement park.
These are the factors that explain why the United Arab Emirates is an MEDC.
-Statistics:!
!
Several statistics prove that the UAE is an MEDC. Firstly, the GDP per capita is
$40,000 and this is due to the large amount of money they make from exporting the
products that are produced in the country (GDP). According to the CIA World Factbook,
the total GDP of the UAE is $191.9 billion and a majority of this comes from the exporting
of oil. Even though the GDP growth rate is -2.7% and the industrial production growth rate
is -5.6%, which is usually quiet abnormal for MEDCʼs, but the recession had also caused
damage to this countryʼs economy, which is the reason that the GDP and the industrial
production has been on a downward trend.
This graph shows the economic growth rate of the UAE over the recent years and one can
see that up until 2010, the UAE was having a steady GDP growth rate. According to the
CIA World Factbook, the reason for this negative economic growth, is because of the
global financial crisis, tight international credit, and deflated asset prices. But, the UAE
have tried several things to improve its economic growth rate. For example, this country
has free trade zones, which basically offers 100% ownership and zero taxes, which is
really helping to attract foreign investors.
Factors of Production:
-Human Resources:
!
The following image is the 2010 population pyramid of the UAE. This countryʼs
population pyramid is very unorthodox. As you can see, the male population is significantly
higher than the female population. This is because of the main resource in the UAE, which
is oil. Oil production is very high in this nation and because of that, the availability of
dangerous jobs in the oil rigs is very high, which attracts immigrants from neighboring
countries such as India and Pakistan, and this is why the male population is significantly
higher than the female population of the UAE. In fact, the sex ratio of the total population is
2.2 males/female and also, 73.9% of the population between the ages of 15-64 are nonnationals. The image below is the 2020 population pyramid of the UAE. As you can see,
the both pyramids are similar, but the population of both males and females is larger than
2010. This shows a positive population growth rate, which according to the CIA World
Factbook is 3.561%. The UAEʼs population pyramid is very different from other countries.
For example, the unique shape of the pyramid is one factor that is different from other
countries. Also, as mentioned before, the significant difference between the male and
female populations of the UAE as well.
!
The labor force in the UAE is also very unusual for most MEDCʼs. Usually MEDCʼs
consist of a decent percentage of the population working in agriculture, because of the
available natural resources, but because the UAE is mostly desert, they do not have a lot
of room to for agriculture, which is why only 7% of the population is occupied by
agriculture. In addition, 15% of the labor force is occupied by the industries and 78% is
occupied by services, which is probably because of the large quantity of restaurants,
malls, and hotels that are located in the UAE.
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The UAEʼs literacy rate is a decent 77.9%, but that is still a bit low for an MEDC, but
that does not mean that there are a lot of uneducated and jobless people in this country.
For example, the unemployment rate in the UAE is only 2.4%, which is a significant
characteristic of an MEDC. The life expectancy is a healthy 76.32 years, which is similar to
many MEDCʼs, such as the United States. This information is essential, because it shows
how unique a country like the UAE is. For example, its sex ratio, which shows that there
are more then 2 males for each female and this is because of the high demand in the UAE
for employees to work at the dangerous oil rigs. Also, the fact that most of the population
between the ages of 15-64, are non-nationals shows that the UAE is such an attraction for
people in neighboring countries who are looking for jobs. Also, the percentage of the
people who work in services, which is most of the population and this shows that the UAE
has many restaurants, malls, hotels, and also the number of taxi drivers in the UAE, which
is important because it also helps understand the where the majority of the impact on the
GDP comes from.
-Capital Resources:
!
The industries are responsible for 52% of the UAEʼs GDP. The main industries in
the UAE consist of the oil industry, the petroleum and petrochemicals industry, the real
estate business, the construction industry, and telecommunications. The UAE has been
most successful over the years in the oil and gas industry, which has not only brought this
country a lot of money from exporting, but has also attracted and given people from the
UAE, as well as neighboring countries the opportunity for jobs. The oil industry is
controlled by the government, because they know that this is the main resource that is
driving them towards a positive economic growth. Approximately 240,000 barrels of oil are
being produced everyday and good quality of gas from offshore fields and the petroleum
and petrochemicals industry is mainly controlled by the Dubai Petroleum Company. The
real estate business and the construction industry has really recently been pushing in the
UAE and mostly in Dubai, because the country is trying to attract tourism and they are
doing that by building and creating amazing and innovative buildings and other
entertaining places such as malls and amusement parks. They are also very focused on
getting as many high class hotels as possible, because they would require more and more
high class hotels for the tourists. They have built the Burj Khalifa, which is the tallest
building in the world and this was very helpful to the UAEʼs people, because it created
many job opportunities. In fact, approximately 12,000 workers were on the construction
site during the peak of the construction. Also, Dubai Land, which is going to be the worldʼs
largest amusement park will also be giving more and more people the opportunity for jobs
and it would also attract tourism. Etisalat is the only telecommunications company that is
allowed to provide cellular network and internet to the people in the UAE. It is a huge
company that started off in 1976 and is used throughout the entire Middle East. In January
31, 2010, Etisalat had reported a net revenue of USD $8.4 billion and net profits of USD
$2.407 billion, which shows the success of this company. Rent is not very cheap, but is not
very expensive in the UAE either and it has really been helping this countryʼs economy,
because many people have started to shift to the UAE, or have been purchasing villas on
the beach for when they come for vacation and a majority of these buyers are Arabs from
different Middle Eastern countries. Also, these buildings that are being built are also
attracting a lot of foreign investors who also believe in the UAEʼs transformation into one of
the major tourist destinations in the world.
-Natural Resources:
!
The UAEʼs natural resources play a huge role in this countryʼs economy as
approximately 85% of the UAEʼs was based on the exports of natural resources. As I
mentioned before in this report, the UAE is mostly desert with very tiny agricultural areas
so the number of natural resources may be lower than usual. The UAEʼs main natural
resources are dates, petroleum and petrochemicals, and of course, oil. This country also
has the basics, which are vegetables fruit, poultry, eggs, dairy products, and fish, as well
as some metals, cement, construction materials, some boat building, handicraft, and
textiles as well. Natural resources are a great way to indicate whether or not a country is
an MEDC, but MEDCʼs such as Japan, does not have very many natural resources, but is
still known as an MEDC. The UAE, however, does have some natural resources and
although it may not be a lot, one of the natural resources that she posses is oil, which is
the most demanded and prestigious resources on the planet. A huge part of this countryʼs
GDP comes from the exporting of oil, as well as petroleum and other petrochemicals.
Dates are also very famous and are also popular around the Middle East, so it is not a bad
natural resource to posses. Eggs, dairy products, fish, and other minor resources in the
UAE are not exported as much, but are used more for local purposes. These are the
natural resources of the UAE and as you can see, because this country does not have a
lot, this country does have to spend a lot of money and import food and other products for
the people, but because of their high GDP, they do not have to worry as much about
spending and importing necessary products.
-Entrepreneurship:
!
Entrepreneurship is the most important factor of production in the UAE right now.
This country has been focusing a lot on trying to not only attract tourists, but to get rich and
willing to spend Arabs from their own country, as well as neighboring countries using
entrepreneurship. For example, the Burj Khalifa, which is the worldʼs tallest building, along
with Dubai Mall, which is the worldʼs largest mall, also the Mall of Emirates, which is the
largest mall in the Gulf region, as well as Dubai Land, which is under construction and is
going to be the worldʼs largest amusement park. The Burj Khalifa is 163 floors and is 823
meters tall, and this project itself cost $1.5 billion. The pricing in Burj Khalifa for office
space is $4,000 per square feet and the Armani Residences, sold for $3,500 per square
feet. Arabs are definitely willing to spend on this and not only them, but celebrities from
around the world have been trying to purchase the Armani apartments in the worldʼs tallest
skyscraper. Another thing for tourists, is that for a 100 AED, which is approximately 2,300
yen, you are allowed to go to the 124 floor and you have to make bookings because it is
completely full. There are certain time periods that you can go and if you buy a ticket at the
last minute, the price goes up to 400 AED, which is approximately 9,000 yen, just to go
into the tower, into the elevator, which reaches from the ground floor to the 124th floor in 1
minute and 5 seconds, which is also the worldʼs fastest elevator, to look at the beautiful
view of Dubai from that height and this attracts many tourists. Hotels are also another
entrepreneurship in the UAE. The government is trying to build a street, consisting of only
5 star hotels all lined up next to each other. Also, they are currently working on 5 towers
that are side by side, and each tower is 70 floors, and each floor is a separate apartment,
and each apartment rotates on itʼs on axis giving owners the capability of rotating their
apartment in any direction, giving them a 360 degree view of Dubai. The UAE is trying to
use entrepreneurship to attract as many tourists as possible and become one of the
worldʼs major tourist destinations.
Burj Khalifa - The Worldʼs
Tallest Building
References:
Burj Khalifa. (2010). Retrieved from
http://www.theresidentarchitect.com/image-­‐=iles/burj%20khalifa.jpg
CIA-­The World Factbook [United Arab Emirates]. (2011, January 13). Retrieved December 5, 2010, from https://www.cia.gov/‌library/‌publications/‌the-­‐world-­‐factbook/‌geos/‌
ae.html
United Arab Emirates Population Pyramid for 2010. (2010). Retrieved from http://www.nationmaster.com/country/tc-­‐united-­‐arab-­‐emirates/Age-­‐_distribution
United Arab Emirates Population Pyramid for 2020. (2010). Retrieved from http://www.nationmaster.com/country/tc-­‐united-­‐arab-­‐emirates/Age-­‐_distribution
United Arab Emirates GDP Growth Rate Graph. (2010). Retrieved from
http://www.tradingeconomics.com/Economics/GDP-­‐Growth.aspx?Symbol=AED