Sustainability Report Example Term Paper
Economic stability in the Middle East and North-African (MENA) countries have gained significant popularity in the wake of political instability and war in most of the countries thereof. The block has the most countries that that have undergone economic challenges that are predominantly as a result of violence and overdependence on oil resources. Egypt, Libya, Palestine, Syria, Iraq, Yemen and Iraq are some of the countries that have experienced tough times based on issues around leadership. Some of these countries such as Egypt, Libya, Bahrain and Lebanon were economic powerhouses in the block but the tide has since turned (Bellin, 2012). On the flipside, Qatar and United Arab Emirates have witnessed significant growth and show continued growth prospects in the future. The economy of most of the MENA countries is heavily reliant on oil; up to 60% of the world’s oil reserves are found in this region (Farzanegan, 2014). Therefore, the region has a very significant role to play in the world economy.
The economic significance of MENA countries has been immense considering the huge deposits of oil and natural gas. Besides, MENA constitutes of some of the countries that were early centers of civilization; meaning that trade has historic significance in these areas. However, growth in the region has often been curtailed by political and civil events, which have often brought instabilities in a number of the member countries. As this happens, other countries have demonstrated significant success. A major wave in the region popularly known as the Arab Spring in 2011resulted to resulted to a change in the political regimes in several of these countries. This resulted to heightened volatility, which has significantly affected the international oil prices (Bellin, 2012. Additionally, the instabilities in Syria have brought about military competition between Russia and the US. This competition has far-reaching economic implications for the region.
MENA region is showing a significant change in terms of economics and demographics. The regional countries share many characteristics in terms of economy and demographic patterns. However, there has been no pursuit for integration and common economic policies, which has been the case in many of the regional blocks. Attempts by Colonel Gamal Abdel Nasser to unite the block in the 1950s and 60s remained futile; Egypt’s merger with Syria soon collapsed (Wiite, 2003). Therefore, independent economic policies for each country have characterized the region. According to demographic projections, the population in MENA countries will supersede that of China and Europe by 2100. This is demystified through the five-fold growth that has been the case between 1950 (110 million people) to over 570 million people in 2017 (Tang & Abosedra, 2017). Though the region has heavily relied on oil resources, there have been concerted efforts by individual countries towards diversification of their economies.
The Economy of United Arab Emirates
The United Arab Emirates (UAE) is a composite country comprises of seven Emirates; Ajman, Abu Dhabi, Dubai, Ras Al-Khaimah, Sharjah, Fujairah, and Umm al-Qaiwain. It is the second largest economy after Saudi Arabia in the MENA region with a GDP of $382.57 billion (2017). This is over 23 times growth in GDP at the point of the country’s unification in 1971, which stood at less than $14 billion. It is the best examples of a diversified economy in the region. Over 70% of the country’s GDP is funded by non-oil income sources. However, economic growth has been progressive since the realization of independence and the subsequent unification in 1971 (Sbia, (Shahbaz, & Hamdi, 2014). Before the country’s intensive exploitation of the oil resources, each of the Emirates relied on its own income-generating activities, which included fishing, seafaring and pearl hunting.
The growth of the country’s economy has greatly been contributed by the foundation laid by the founding father Sheikh Zayed Bin Sultan Al Nahyan. He made good use of the oil revenue to spearhead development and diversify the economy. Upon unification, the country established logistic and shipping centers including ports and airports to facilitate trade. Some of the early developments include Dubai International Airport, Port Rashid and the Free Zone of Jebel Ali. Additionally, the country began investing heavily in real estate and tourism. Though the hard economic times prevailed during the 2007/8 global economic recession, UAE was able to stand after the recession and continue a growth trajectory. Only in 2009 did the country register a negative GDP growth. Today, UAE’s economic health is grounded on consistent and prudent government expenditure, strong financial reserves, high foreign direct investments, increased sovereign wealth fund, economic diversification policy, and strategic location.
UAE Economic History
UAE just like most of the MENA countries have been experienced economic growth in the last half of the 20th century courtesy of oil discovery and exploration. However, before the emergence of the oil-based economy, the pearl and fishing industries were a major contribution to the country’s economy. This is the point at which the Emiratis began trading with other countries of the world, including Indians and Japanese. In the early history, Sumerians, who traded in bronze and jewelry, occupied the region. In the late 19th century, the British invaded the region and established treaties with the local leaders. This resulted in peace and stability in the region, creating a conducive environment for the trade in natural pearls. The business of pearls was did very well in the early years of the 20th century. It resulted to creation of many employment opportunities plus the Portuguese that had navigated through the Arabian coast provided ready market. By 905, the number of pearling boats was in excess of 4000. The kingdom of Zayed Bin Khalifa Al Nahyan became very influential in the region courtesy of the pearl-income. The culture of pearling had become the trend across the coastal areas of UAE. During the pearling season (June to September), men would gather around the coastline with their boats and supplies; they could spend up to three months in the sea. In late 1920s, Japanese cultured pearls emerged and threw pearling industry off balance. The Japanese pearls were much cheaper and of high quality. By 1930, pearl merchants were a no-show in the Persian Gulf (Carter, 2005). After the collapse of the pearl industry, the prospects of exploring oil began; the actual exploration began in the 1950s.
UAE politics have been quite consistent since the unification of the seven monarchies under the leadership of Sheikh Zayed Bin Sultan Al Nahyan. It happens by default that the monarch of Abu Dhabi is the outright president and head of state while the monarch of Dubai assumes the role of the Prime Minister and vice-president. This has been trend since independence in 1966. The political leadership has significantly contributed to economic stability in the country (Abu‐Bader & Abu‐Qarn, 2008). The country’s founding father Sheikh Zayed Bin Sultan Al Nahyan was very instrumental in enhancing economic growth across the Emirates. Zayed devoted his time at the helm of leadership of UAE in establishing various institutions including schools and hospitals. He also ensured that these facilities were accessible to the citizens at no cost. He used the revenues generated from oil to grow the economy, making UAE too rank among the best economies in the world. In his honor, UAE president Sheikh Khalifa pronounced 2018 would be the year of Zayed.
The building of Dubai into a spectacular economic hub can be significantly attributed to its current ruler, Sheikh Mohammed bin Rashid Al Maktoum. He is attributed to making divergent economic reforms in the UAE. He spearheaded the development of the UAE Federal Government Strategy and the country’s Vision 2021. He has greatly contributed to the diversification of the UAE economy through Dubai Holding, which is a conglomerate comprising among others Jumeirah Group, Emirates Airline and DP World. In addition, he is the brain behind construction of Dubai to be a global city and an outstanding tourism center. There are a couple of many other projects that have been developed under his leadership. Such includes Burj Kahlifa (world’s tallest building), the Dubai Media City, Palm Islands and technological park among many other developments. These developments have helped stimulate the country’s economy through trade and tourism.
The launch of new ministries has proved to be a step in the right direction towards tapping on new technologies and talents towards economic growth. Just recently, the Prime Minister Sheikh Mohammed bin Rashid Al Maktoum launched the virtual ‘Ministry of Possibilities’. This is a ministry aimed at application of ‘design-thinking and experimentation’ in developing solutions that address contemporary and futuristic issues. On the other hand, the Prime Minister has seen the establishment of the Ministry of Artificial Intelligence under a 28-year old H.E Omar Bin Sultan Al Olama. Other recently created ministries include the Ministry of State for happiness and Wellbeing, Ministry of State for Advanced Sciences and the Ministry of State for Youth. The political move of creating additional ministries is focused on steering the next phase of economic growth that is technological driven.
UAE has massive deposits of natural gas and oil. Regardless of the economic diversification in UAE, the role of oil and natural gas in the economy is immense. Among the OPEC countries, UAE is the fourth is the largest oil producer. The economy of UAE has been built around oil and natural gas. It is estimated that the country has nearly 100 billion barrels of oil that has not been exploited. Being the largest Emirate, Abu Dhabi is the leading oil producer with about 92 billion barrels of oil followed by Dubai, which has only 4 billion barrels. Daily oil exploration has been regulated to promote sustainability. The daily production is approximately 2.9 million barrels (Mahroum & Al-Saleh, 2016). Oil production has been regulated through the Supreme Petroleum Council. In regards to natural gas, the country has over 6 trillion cubic meters, most of which is found in Abu Dhabi. Though the country has significantly high natural gas reserves, a number of reserves have gas laced with sulfur, which makes processing challenging and expensive. These two natural resources have helped facilitate the overall growth of UAE economy.
Culture and Traditions
The role of culture in the economic development of UAE has been significant. UAE has been at the center of cultural events, including festivals and exhibitions. Culture has often related to aspects of identity. Cultural artifacts have played a significant role in steering both domestic and international tourism in UAE. Al Ain city is one of the magnificent cultural centers that has enhanced the economy of the country. It is protected under UNESCO’s heritage sites. Additionally, UNESCO has named Sharjah Emirate as a cultural capital of the Arabian countries. It is also considered as a significant center for Islamic culture (Exell & Rico, 2016). These cases show that UAE has been growing its economy through all the sectors.
The rich culture in UAE gives the meaning to economic development. There are widespread institutions across the Emirates that are focused on promoting cultural aspects of the country. These bodies do discharge various responsibilities aimed at unlocking the cultural doors of the country. They include Abu Dhabi Authority for Culture and Heritage, and Dubai Culture and Art Authority. Additionally, the Ministry of Media and Culture has been instituted to advance various artistic elements of the country including festivals, film industry, books, poetry, archeology, crafts, heritage sites, music and libraries among others (Exell & Rico, 2016). Culture is one of the key components that has been prioritized in the country in order to ensure that diversification and sustainability of the economy is assured.
The culture of pearl dependency also had a great role to play in the economic development of UAE. The pearling industry is one of the earlier industries that greatly facilitated the growth of trade and the banking sector. The pearling industry provided an array of opportunities for UAE people including divers, captains, boat riders, merchants, buyers and middlemen. This practice brought about trade expertise, establishment of foreign relationships and encouraging interdependence (Exell & Rico, 2016). The factors that facilitated pearling industry have stood the test of time; some are applicable in today’s UAE, they include expertise in financing, resilience, multiculturalism and innovations. Through pearling, the Emiratis learnt how to adapt, to take advantage of opportunities, to be visionary and have the ability to negotiate. Pearling was the first activity that opened UAE to globalization way before the discovery of oil. It allowed for interactions with the Yemenis, Indians, Iranians, and Omanis among other Arabs.
UAE borders Qatar to the North, Saudi Arabia to the southern and western sides, Oman on the east and Persian Gulf to the south. Nearly 87% of the country is the Emirate of Abu Dhabi (Yagoub, 2018). The country has an extensive coastline, which has provided a huge opportunity for sea reclamation especially in Dubai. The strategic location has also created an opportunity for the development of artificial islands. The coastline has several natural harbors, the largest being at Dubayy.
UAE is a serious tourism destination. Through concerted efforts by the current Prime Minister, the country has realized significant milestones in development of tourist attractions. In 2018, it is estimated that over 20 million tourists visited UAE. The country is home to the world’s skyscrapers such as the Burj Khalifa building. The building has an observational deck, where tourists can have a view Dubai city (Hatemi, 2016). Among the MENA countries, the tourist attractions of UAE are outstanding; the Sheikh Zayed mosque, Ferrari World rides, Palm Jumeriah Islands, Sharjah Art Museum and Jabel Hafeet roads, which provides a unique desert experience among many other attractions (Al-Khouri, 2012). Dubai is the epitome of tourism in the country with countless of cultural and traditional features alongside contemporary structures and features.
UAE has been at the center of technological development. The recent establishment of ministries of Artificial intelligence and Ministry of Advanced Sciences is evidence enough that the country is quite progressive in terms of technology. Diverse technologies have been adopted while others are in the pipeline. In 2016, 3D printing technology was already in place. In addition, the country has been in the forefront of advancing space science as evidenced through the launch of four satellites (DubaiSat1, DubaiSat2, Yahsat1 and YahSat2) (Shahbaz,et al.,2016). The country is also planning a mission to mars for an unmanned probe. The establishment of Free zones such as the Dubai Internet City and Dubai Media city has created opportunities for advancement in information technology. The country has also engaged in intensive research in other technological sectors that would help to build future economies, including artificial intelligence, flying cars and robotics among many others.
UAE is one of the culturally, racially and religiously diverse societies in the world. The country has a huge number of expatriates (more than 80%) drawn from different corners of the world (Herb, 2009). Despite the expansive region covered by UAE, it has a population of only 9.68 million. Dubai is the most populous Emirate followed by Abu Dhabi while Um Al-Quwain is inhabited by only 0.9% of the population. A large portion of the population are Indians (27.5% of population) followed by the Pakistanis (12.69%) and the Emiratis are third (11.48%).
UAE Economy as Compared to the Preceding Economic Powerhouses
MENA countries have very different in GDP per capita. As of 2017, UAE’s GDP per capita was $40,698.85. In the recent times, some of the countries in the region have been doing well at the international stage while others have shown negative economic growth. Countries within the Persian Gulf such as Qatar, Bahrain, Saudi Arabia, Israel and Kuwait have very high GDP per capita. On the other extreme end, Sudan, Yemen and Mauritania are the poor countries in the block. Yemen and Syria have continued to register low economic growth and reduced per capita due to the instabilities brought by war in the two countries. In overall, the region is projected to continue posting economic growth, contributed by an increase in oil prices, monetary conditions, and fiscal support. The region is expected to register a 2% economic growth in 2019. In Egypt, the economic policies developed by Colonel Abdel Nasser in 1950s and 60s left a significant impact on the Egyptian economy. The country has managed to have one of the most diversified and developed economies in the MENA block. The country engaged in diverse economic reforms that allowed foreign investors into the country. This resulted in an average 5% growth in economy prior to 2010 (Omri, et al., 2015). The resulting economic predicaments contributed to the removal of Hosni Mubarak in 2011 and his successor Mohammed Morsi in 2013. According to World Bank data, Egypt has witnessed over 10% GDP growth between 1960 and 2018 (1963, 1964 and 1976).
The economic growth of Lebanon has been quite progressive since the 1980s. The country’s GDP has grown from $3.314 billion in 1988 to $ 51.84 billion in 2017. However, the country’s highest GDP growth rate was experienced in 1990 and 1991 at 26.333% and 49.447% in 1991 respectively. The services sector makes a huge contribution in Lebanon’s economy. Banking, tourism and agriculture have a huge stake in the country’s economy. This shows that the country has one of the diversified economies in the region. However, political instabilities in Syria have adversely affected the tourism industry in the country, thereby contributing to the dwindling economic growth. Another challenge with the economy is that the major economic activities are based around the capital, Beirut. Bahrain’s economy has been average for a long time. The economy has grown from a GDP of $1.3 billion in 1981 to $ 13.32 billion in 2017. In 1981 and 1982, the annual GDP growth was negative due to the volatile oil prices. However, the country picked in the subsequent years and has managed to register over 10% growth; 10.4% in 1987, 11.23% in 1991 and 12.87% in 1993. The country’s free and open market policy has facilitated the growth in the economy. This has allowed the country to diversify its economy through a significant 60% of the GDP is obtained from oil (Berument, Ceylan & Dogan, 2010). Low oil prices have often resulted to budgetary deficits in the country in the recent years and the country does not have many income streams to cover for the deficits. Up to 86% of the country’s budgetary revenue comes through oil income.
Pointer’s to UAE’s Economic Sustainability
A number of MENA countries have been unable to maintain their economic status especially because of conflicts, which destabilized the economies. This has been the case in Egypt, Libya, Syria, Iraq and Yemen among others. Besides, instabilities in the region have a negative effect on the neighboring countries. Another problem relates to overreliance on oil revenue and failure to foster economic integration that would benefit the block. The big question therefore is, despite the exponential growth, will UAE maintain the growth trajectory? The following pointers are likely to contribute immensely to sustainability of UAE’s economic model:
UAE has constantly moved away from the oil-dependent economy since the unification of the Emirates in 1971. The government policy of the founding fathers revolved around a diversified economy. This has made UAE to emerge strongly as a serious technological center, tourist destination, financial center, and trading center (Shayah, 2015). Besides, the country has huge investments in other countries, which have resulted to high foreign direct investments and has invested locally in real estate and infrastructure. The government is focused on developing high growth sectors and futuristic technological sectors. There is a strong correlation between economic diversification and economic growth. Economic diversification is a key pillar of UAE’s 2021 economic blueprint, which seeks to reduce the contribution of oil revenue on GDP to 5% (Shayah, 2015).
United Arab Emirates prides in the best infrastructure in the region. The country’s infrastructure has heavily facilitated the growth of the country’s economy. With state of art roads, rails, airports and telecommunications, UAE has every reason to advance its economy. Besides, there are plans to develop more sophisticated infrastructure based on innovation and technology. According to 2017/8 Global Competitiveness Report, UAE is 17th globally in infrastructure. The road network across the Emirates and that linking neighboring countries is of high quality. Among the earliest drivers of non-oil economy was the aviation industry. With Emirates and Etihad Airlines, and seven international Airports, UAE has indeed differentiated itself as an aviation hub. The industry contributes about $22 billion to the economy annually besides employment creation (Toledo, 2013). The maritime activities have also been boosted by the state of art ports spread across the Western coast. The Dubai Railway Metro was the first railway project. It has since opened up the country to more opportunities for rail transport including the Etihad Rail Project. Finally, the telecommunication sector has been growing and has significant 5% contribution to the country’s GDP. The sector has allowed for growth of other aspects of the economy including banking, information, education, healthcare and media among others. The country has broad fiber connectivity. Etisalat is expected to roll out the new 5G technology in 2020.
Political Leadership and Stability
The ideals left by the founding fathers still reign supreme in the country. The country has a well-organized system of governance that is progressive and visionary. The contributions of UAE’s founding father Sheikh Zayed and the current Prime Minister Mohammed Bin Rashid will go a long way into establishing a very strong economy. The two leaders have proved to be visionary, resilient and futuristic (Jabnoun, & Juma, 2005). Since the leadership is hereditary, it is possible to have the positive ideals passed from one generation to another. However, disagreements among the monarchies may bring instabilities in the religion, which can hamper the economic progress. Despite this, the beauty of the arrangement is that there are clear roles of each one of them as defined by the constitution. The establishment of futuristic ideas and visions by the political leaders is likely to elevate the country to a higher economic status than any other MENA country. Regional stability is also very important in ensuring that UAE’s economic trajectory is sustained.
UAE’s Vision 2021 seeks to have the country build a knowledge-based economy. This is dependent on technology and information. The blueprint seeks to have the country gain competitive advantage through enhancing knowledge capacity. To achieve this, the leadership aims to invest heavily in technology, science and innovations. In order to actualize the vision, investment in research and development ought to be heightened. The ICT sector is being revamped in order to address the emerging issues around knowledge-based economy (Muysken, & Nour, 2006). With concerted efforts in education, training and research, the country will manage to meet the needs of the future economy.
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