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The United Arab Emirates (UAE) Vision 2021 spells out economic and social prosperity intentions of the country. The vision is presented in key themes that capture the interests of the country’s population. The themes are as follows, ‘united in ambition and responsibility,’ ‘united in destiny’, and ‘united in knowledge.’ The Vision outlines the strategic priorities of the country as economic development, social development, security justice and safety, infrastructure, land, and environment as well as government excellence.1
The country has made progress economically and socially in the past and needs to maintain the momentum in coming years. The national interest is to be proactive in responding to challenges affecting the people of the UAE and to leave a legacy of prosperity and stability. It also seeks to have all its citizens enjoying a life of dignity and stability.
The country needs its people to be confident and socially responsible, and it can only do so when it has sufficient resources for education and community policing. As confident citizens, Emiratis should be able to carve their future in the spirit of entrepreneurship. They will be able to embrace personal commitment and strong work ethic that leads to satisfaction and motivation for self-reliance. This should also lead to better social outcomes for the society and reduced overall dependence on government assistance for social coping.
On the international environment, the UAE remains a major trading partner with various countries around the world, which helps it manage its export and import trade to support GDP growth. The country is connected to the world financial system, which allows it to receive and transfer capital necessary for investment in economic development projects such as infrastructure. It is also a member of the World Trade Organization.
The membership supports trade liberalization and allows the country to participate in global trade effectively. The oil prices in the world have been stabilizing after reducing; they will continue to affect the opportunities for earning higher revenues for the UAE government and affect its ability to finance development projects that support GDP growth and sustain inability to realize its goals for Vision 20212
The influencing factors in the domestic environment include the following. The UAE has one of the most highly developed economies with sufficient industrial capacity to support growth. It already counts as one of the most popular tourist destinations in the world and attracts different types of tourists and investors in its real estate sector that has been growing very fast in the past few years.
The country has a detailed economic development plan that is renewed every two years to offer direction for investment and support financial and other economic sectors. The capital invested in the country appreciates quickly, which is the main reason for investor attraction. UAE has been a recipient of UAE inflows that amount to $10.5 billion.
The UAE economy is considered as the 25th freest country in the world regarding its ability to support investor freedom in engaging in economic activities for profit. Also, the country has adequate measures for managing government spending and is free from corruption. Nevertheless, the country does not have sufficient freedom in its monetary policy and is reliant on restrictions of trade and budgeting that can curtail economic activity.
It has a population of 9 million people and a per capita income of $30,122 with the unemployment rate being 3.8%. Another positive indicator for the country’s economic prospects is the low inflation rate of 1.1%.
Other factors influencing the attainment of the economic development strategy are the limited governance at the federal level, allowing different Emiratis to levy differing corporate taxes. The economy is also dependent on oil and gas revenues that contribute to 21.8 per cent of the domestic revenue. Meanwhile, the government debt is about 12 percent of the domestic product.
Opportunities, challenges, and threats to state interests are important for reviewing the strategy’s ability to succeed. A capping of foreign investments at 49% limits participation of external partners in the achievement of the national interests. A low population about the demands of economic growth is also a hindrance factor.
There is a huge opportunity in the real estate market serving as a pillar of economic growth in the domestic economy, which helps to attract international capital and to sustain employment. The government can proceed to offer additional incentives for development of the sector include the lowering of corporate tax for companies involved to spur additional economic activity. The robust financial sector can be used to spur economic development to improve the attainment of national state interests.
By altering the monetary policy and the fiscal policies, the state will be able to take advantage of the increased demand for real estate. It can also spur growth in the education sector and promote other learning opportunities and internship programs in companies to ensure that the country becomes knowledgeable. The resulting growth of knowledge in the economy will improve the innovative capacity of the country and help in the overall growth of different industries, which will result in economic prosperity.
The biggest threat to the economic growth prospect is the general attitude among Emiratis against work. The lack of a strong work ethic implies that many opportunities for growing businesses and contributing to the growth of a robust small and medium enterprise sector will be missing.
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However, the Emiratization program currently in place is helping to ensure that the culture of disliking work wanes and more citizens get involved in supporting economic activities. While it is a good initiative, hiring quotas as a government policy also threatens the economic productivity of individuals. When people are guaranteed work placement irrespective of their qualifications, they tend to slack and, therefore, jeopardize the economic opportunities that UAE companies and institution have in the global economy.
Meanwhile, some threats and opportunities are yet to be addressed by current government policies. The declining global oil prices are a threat to economic growth given that the diversification intention relies on high oil revenues that are reallocated to other sectors of the economy. The government is yet to accelerate its support for other sectors of the economy, such as tourism and non-oil exports.
It needs to come up with incentive plans for promoting exports, which may include devaluations of its currency or changes in taxation policies and relaxation of cultural rules to accommodate more visitors from different countries around the world. Another opportunity is in the promotion of industrial zones, which the government can use to spur economic activity, boost employment rates and make the UAE a manufacturing hub whose status will support the attainment of economic prosperity.
The current policies are meeting the national interests and goals of the country. They have led to improvements in business freedom, government spending, and investment freedom. They have also laid the foundation for building a knowledge economy through the promotion of human resource development at different economic levels. The instruments of power, including the judiciary and the national government must ensure that the current policies are implemented effectively.
States and national policing authorities must continue fighting against corruption to ensure that investors and employees have sufficient capacity to contribute to economic growth and personal fulfilment. Besides, the regulatory authorities must ensure that education standards, building standards, environmental and social standards are in place. They should be followed in all cases to sustain a planned growth of the economy.
The growth is beneficial to every sector and citizen in the country. Effective use of these instruments, which include regulation, policies, and culture, will be through the promotion of individual and community expression and participation in economic development. Support for a civil society in the country may be needed to help keep the relevant government and non-government institutions in check concerning the attainment of economic prosperity3
Support for the social development as identified in the vision 2021 includes the development of a national identity and social cohesion as well as increases in cultural life and improvement in the work environment.
These features help to cement the strategy for growth as part of overall living conditions for people in the UAE, and it will positively affect business practice to promote sustained growth. Overall, there is a need for sufficient infrastructure, land, and environmental development to support the demands of increased economic activity that lead to economic prosperity.
Haouas, Ilham, and Almas Heshmati. “Can the UAE Avoid the Oil Curse by Economic Diversification?” IZA Discussion Paper Series, February 2014. Web.
UAE Interact. United Arab Emirates Yearbook: Economic Development. 2008. Web.
United Arab Emirates. Vision 2021. 2015. Web.
1 The United Arab Emirates, Vision 2021, 2015.
2. Haouas Ilham and Almas Heshmati, ‘Can the UAE avoid the oil curse by economic diversification?’, IZA Discussion Paper Series, February 2014.
3. UAE Interact, United Arab Emirates Yearbook: Economic Development, 2008.