Globalisation in the United Arab Emirates


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Outlines the influence (and disadvantages) of globalisation on the economy of the United Arab Emirates (UAE), as well as strategies used to promote economic growth and development in the nation.

Made for Year 11 Economics Class
(November 2013).

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Globalisation in the United Arab Emirates

  1. 1. Globalisation in the United Arab Emirates Globalisation can be defined as the unification of economies, politics and cultures from different nations as 'one'. In an economical sense, it involves the international exchange of assets like goods and services, finance, investment funds and capital which in turn develops economic linkages among countries. The United Arab Emirates, AKA the ‘U.A.E’, is a tiny country in the Middle East which has largely benefited from globalisation. Over the last 40 years, the U.A.E changed from being one of the world's least developed nations to a nation with a nominal GDP growth averaging 4.6% from 2000 to 2012. One leading factor contributing to this growth is the nation's massive oil revenues, its exports on oil and gas accounting for 38% of the nation's GDP. These figures make the U.A.E the 30th largest economy in the world. An abundance of natural resources has been the major economic advancement strategy for the U.A.E, yet its economy has begun shifting from its status as a producer of merely oil and gas. There is nothing wrong with the nation's love for its natural resources, though; since the mid 20th-century inception of its exportation, oil helped modernise the U.A.E, its revenue being invested in education, healthcare and national infrastructure which later sparked a high standard of living and an average life expectancy of 76.7 years, higher than any other Arab nation. Having joined the Organization of Petroleum Exporting Countries (OPEC) in 1970, the nation earned status as a big name in the global energy market holding 7.9% of the world's oil reserves, thus making it the 5th largest oil exporter in the world. Due to the need to diversify its economy, expand the private sector and generate employment for its people, the U.A.E has worked hard in attracting foreign investors, which in return has formed a substantial account of FDI Inflow and Outflow. The nation’s FDI net inflow rate as a percentage of its GDP stood at 2.13% in 2011. One fact that has contributed to this outcome is the nation's liberalized FDI rules. The U.A.E has endlessly established free zones which, to a changing extent, function outside the laws of the local Emirate and federal laws due to its 100 per cent allowance of foreign ownership of companies. Foreign investment is not equally distributed among the U.A.E’s seven emirates, which creates something like a competition to see which emirate receives the most FDI Inflow. The emirate of Dubai is currently winning this race. All in all, it can be evaluated that the U.A.E's success in foreign direct investment has contributed to its economic development. The United Arab Emirates - or the 'mini-USA' as some in fact call it - is an active member of the global economy through its involvement in numerous world trading blocs including the Arab League, The Council of Arab Economic Unity (CAEU) and the Gulf Cooperation Council (GCC). The U.A.E government in addition has signed several trade agreements, mainly bilateral ones with its Middle Eastern neighbours including Iraq, Syria and Lebanon. Negotiations are still to be signed with the European Union and the US. The U.A.E also belongs to a number of international Trade Organisations, its memberships having been of tremendous economic benefit. Such Organisations include the World Trade Organisation (WTO), United Nations (UN), International Monetary Fund (IMF) and The World Bank. Despite its endless advantages, globalisation has harmed the Arab nation due to the opportunity cost of an untainted environment. Because 88 per cent of the total population lives in urban areas, developments in modern infrastructure have been rapid which poses as a risk for the nation’s species, habitats and genetic diversity. Tourism earns a bit of the blame here. As the U.A.E develops itself into a global financial, transnational corporation and tourism hub, several 'mega-projects' have been constructed. These include Dubai's Burj Khalifa; the tallest man-made structure in the world standing over 828 metres; and The Palm Jumeirah - also in Dubai - a man-made island costing $1.5 billion that holds residences, hotels and shops. As a result of its conspicuous work on tourism, the U.A.E has been given recognition for having the world's highest ecological footprint at 9.5 global hectares per capita, as well as the highest per capita carbon footprint. In response to all this, the U.A.E government has carried out an endless body of legislation that has to this day done nothing to conserve the environment effectively. Methods such as land restoration, the conservation of natural habitats, and species translocation are crucial for ecological mitigation if the U.A.E seeks to avoid pollution or a quality of life decrease in the future.
  2. 2. The United Arab Emirates is a country that embraces the global economy, as shown by its rapid industrial developments, trade agreements, diversified exporting and technological advancements. As long as the Emiratis learn not to allow globalisation to diminish their Arabian culture as it already has 'blended' it a little, the nation is sure to enjoy flourishing in the many benefits that globalisation brings. In conclusion, the U.A.E's small, open economy, with its liberal economic policies and lenient government is definitely bound to continue experiencing sustainable growth into the future. Bibliography • United Arab Emirates profile, 26 October, 2013. • The World Factbook > MIDDLE EAST > UNITED ARAB EMIRATES. October 25, 2013. • THE EFFECT OF GLOBALIZATION ON DUBAI'S ECONOMIC DEVELOPMENT. • Path of globalization and the UAE. • Advantages and Disadvantages of Globalization in The UAE. • ates.html, Economy of the United Arab Emirates. • Economy of the United Arab Emirates. • U.S. Relations With United Arab Emirates, June 11, 2013. • Foreign Direct Investment In The United Arab Emirates Economics Essay. • A generally liberal economy whose perfomance could further improve with structural reform, April 2006. • papers/JeffSwanson-UAE.pdf. Jeff Swanson, December 6, 2006. • United Arab Emirates GDP Growth Rate. • AE.pdf. Foreign investment in the United Arab Emirates, March 2011.