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UNITED ARAB EMIRATES
Economic Freedom Score
25
World Rank:
25
Regional Rank:
2
Least
free 0
United Arab Emirates is competitive in many areas
Tandheofregulations
economic freedom. Barriers to trade are quite low,
support open-market policies. With a
50
75
Most
100 free
72.6
Freedom Trend
74
favorable business climate and political stability, the UAE
has created a dynamic entrepreneurial environment for
international investors. The financial sector’s overall
soundness has improved substantially since the Dubai
debt crisis of 2009.
ECONOMIC FREEDOM SNAPSHOT
• 2016 Economic Freedom Score: 72.6 (up 0.2 point)
• Economic Freedom Status: Mostly Free
• Global Ranking: 25th
• Regional Ranking: 2nd in the Middle East/North Africa Region
• Notable Successes: Open Markets and Regulatory Efficiency
• Concerns: Property Rights and Corruption
• Overall Score Change Since 2012: +3.3
Despite regional political and security instability, the rule
of law has been relatively well maintained. The perceived
level of corruption has declined, but the judicial system
remains inefficient and susceptible to political influence.
BACKGROUND: The United Arab Emirates is a federation of
seven monarchies: Abu Dhabi, Ajman, Dubai, Fujairah, Ras
Al-Khaimah, Sharjah, and Umm al- Qaiwain. The Federal
Supreme Council (the seven rulers of the individual emirates) selects the president and vice president for five-year
terms with no term limits. Abu Dhabi ruler Sheikh Khalifa bin
Zayed al‑Nahyan has been president since November 2004. In
2011, the government responded to protests for greater political plurality with a multi-year infrastructure investment in
the poorer northern emirates and by expanding the number
of people allowed to vote in September 2011 elections for the
Federal National Council. Since 2012, the UAE has clamped
down on social media activism. Home to many multinational
firms that operate in the region, the UAE has a modern communications and transportation infrastructure.
How Do We Measure Economic Freedom?
See page 467 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
73
72
71
70
69
68
2012
2013
2014
2015
2016
Country Comparisons
72.6
Country
World
Average
60.7
Regional
Average
62.6
Free
Economies
83.9
0
20
40
60
80
100
Quick Facts
Population: 9.3 million
GDP (PPP): $599.8 billion
3.6% growth in 2014
5-year compound annual growth 4.0%
$64,479 per capita
Unemployment: 3.6%
Inflation (CPI): 2.3%
FDI Inflow: $10.1 billion
Public Debt: 12.1% of GDP
2014 data unless otherwise noted.
Data compiled as of September 2015.
437
UNITED ARAB EMIRATES (continued)
THE TEN ECONOMIC FREEDOMS
Score
RULE OF
LAW
Property Rights
Freedom from Corruption
Country
World Average
55.0
70.0
0
20
40
60
80
Rank
1–Year
Change
50th
26th
0
+1.0
100
Although the UAE is considered one of the Middle East’s least corrupt countries, most decisions of any significance are made by the various emirates’ ruling families. The judiciary is not
independent, and court rulings are subject to review by the political leadership, but the rule of
law is generally well maintained. Each emirate is allowed to decide on how ownership of land
may be transferred within its borders.
Fiscal Freedom 95.0
GOVERNMENT
Government Spending 76.1
SIZE
10th
63rd
0
20
40
60
80
–4.5
–9.7
100
The UAE has no income tax and no federal-level corporate tax. Different corporate tax rates
exist for certain activities in some emirates. There is no general sales tax, and the overall tax
burden equals 22.4 percent of total domestic income. Government spending amounts to 28.2
percent of total domestic output. Large oil revenues have kept the government budget in surplus and public debt below 15 percent of GDP.
REGULATORY
EFFICIENCY
Business Freedom
Labor Freedom
Monetary Freedom
79.6
80.7
81.3
28th
14th
51st
0
20
40
60
80
+4.9
–3.1
–2.5
100
Business regulatory efficiency has improved. There is no minimum capital requirement for
establishing a business, and licensing requirements have been streamlined. Labor regulations
are relatively flexible, and the non-salary cost of employing a worker is moderate. The UAE
cut energy subsidies in 2015, but commercial airlines in the U.S. and Europe have charged that
there are “obvious and massive” state subsidies to Emirates and Etihad airlines.
OPEN
MARKETS
Trade Freedom
Investment Freedom
Financial Freedom
82.8
45.0
60.0
66th
124th
38th
0
20
40
60
80
+0.4
+5.0
+10.0
100
The UAE’s average tariff rate is 3.6 percent. Foreign ownership levels are generally capped
at 49 percent. State-owned enterprises include Emirates Airlines and Emirates National Oil
Company. In many cases, at least 51 percent of a business must be owned by a UAE national.
The modern financial sector provides a full range of services. Capital markets are open and
vibrant and are becoming more competitive.
Long-Term Score Change (since 1996)
RULE OF LAW
Property Rights
Freedom from
Corruption
438
–35.0
–20.0
GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending
–4.9
+29.0
REGULATORY
EFFICIENCY
Business Freedom
Labor Freedom
Monetary Freedom
2016 Index of Economic Freedom
OPEN MARKETS
–5.4
+6.4
+6.1
Trade Freedom
+5.8
Investment Freedom +15.0
Financial Freedom +10.0